What’s it all about?
Techniques for measuring changes in a way that allows you to compare over time, across currencies and different scales of organisation.
More detail than you will probably need in your syllabus, but further information on index construction. The formulae all look quite confusing. some people can remember formulae like this, I teach it in a different way, but by analysing what I have taught you, you will see where what I say fits in to the formulae.
Where to find indices.
the Office for National Statistics is the source of much indexed information of importance to the economy and business. Explore the site for examples of indices.
Always interesting when something I buy makes it in to the Index (gin).
Arguments for using Indexing in calculating wage rates, both from the US.
“Reasonable objections can be raised to the practice of pegging increases in the minimum wage to the rate of inflation, as Oregon has done since 2002. The national rate of inflation doesn’t always capture cost-of-living changes in Oregon, and indexing could hit employers with higher labor costs at an ill-timed point in the business cycle. But indexing is better than the alternative — infrequent but disruptively large increases in the minimum wage.”
“Currently, the federal minimum wage is not tied to inflation; the only way it goes up is if Congress manages to overcome persistent gridlock and agrees to an increase. Though raising the minimum wage is exceedingly popular among the American public, Congress has only voted for one increase in the past two decades.
As a result, inflation has eaten into its purchasing power. For example, had the 1968 floor of $1.60 per hour been indexed to inflation, it would be $10.90 per hour today, more than 50 percent higher than the current minimum wage of $7.25.”
An example of how indexed information can be presented.
An example of how an Index is used practice.
This is a publication from the National Statistics office for Portugal and shows changes in Labour Costs over time.
Indices can go down too.
We are used to indices showing increasing numbers (apart from perhaps house prices), it doesn’t mean that inflation can go in to reverse. We were in a deflationary period in the spring of 2015 and it may reoccur. Prices going down sounds like good news, but it isn’t always.
Arguments in favour of the Happiness Index as a way of measuring economic wellbeing.
Possible Written Questions.
(No indication of marks – the more marks a question gets, the more you are expected to write – detail that is, not just words!) If you can’t answer these, you need to do some more reading. I do ‘find’ questions elsewhere, so these aren’t all questions I have used myself.