Index Numbers
Historically, the first index was discovered in 1764 to compare the Italian price index in 1750 with the price level in 1500. Though originally developed for measuring the effect of change in prices, index numbers have nowadays become one of the most widely used statistical devices and there is hardly any field where they are not used. In the Newspapers headline, the fact that the prices are going up or down, and that industrial production is rising or falling, that imports are increasing or decreasing, that crimes are rising in a particular time period compared to the previous period are all explained by index numbers. They are used to feel the pulse of the economy and they have come to be used as indicators of inflationary of deflationary tendencies. In fact, they are described as the barometers of economic activity i.e. if one wants to get an idea to what is happening to an economy, he must look to important indices such as the index number of industrial production, business activity, agricultural production, etc.
Some most important definitions of the index numbers are given below:
Index number are the devices for measurement of the differences in the magnitude of group of related variables.
An index number is a statistical measure designed to represent the changes in a variable or a group of related variables with respect to time, geographic location or other characteristics such as profession, income etc.
In its simplest form, an index number is the ratio of two index numbers stated as a percent. An index number is a statistical measure designed to show the changes in one variable or in a group of related variables over time, or with respect to the geographic location, or in terms of some other specifications or characteristics.
Some of its main important topics are:
1. Index number adequacy
2. Constructing index-method
3. Index numbers deflating use
4. Chain index numbers
5. Indices calculation
6. Geometric mean
7. Non-parametric tests
8. Quantity volume-index numbers
9. Light scattering rainbow
10. Simple aggregative method
11. Simple average price method
12. Relatives weighted average
13. Weighted aggregative indices