This volume, and a subsequent one, contain several new papers on index number and aggregation theory, as well as some previously published papers, by W.E. Diewert and co-authors. The two volumes study aggregation problems in economics, primarily the aggregation over goods problem. However, some of the chapters also touch on aspects of the aggregation over agents problem. In the present volume the reader can find, according to his/her requirements, either a short course on index number theory; a more in-depth course; or chapters on specific topics such as the measurement of inequality, functional forms for social welfare functions, or the theory of choice under uncertainty. Students and researchers will appreciate having these papers easily accessible. The book will be valuable too for those in the government agencies around the world that produce price statistics, insuring an understanding of important properties of alternative indexes, and of how economists use and interpret price indexes.

This research was supported by the World Bank and the Social Sciences and Humanities R~search Council of Canada. Neither institution is responsible for the views expressed in this paper. The author is indebted to V. Corbo, A. Haymer, Y. Kanemoto, K. Lee, K. Mera, Hal Varian and A. Walters for helpful comments and to Elizabeth Lambert, Shehnaz Motani', and Jeanette Leigh Paisley for excellent typing services. I would like to dedicate this book to my wife, Virginia. TABLE OF CONTENTS 1. Introduction . . . *. . **. . *. **. ***. . . . *. . . . . *. *. . . *. . . *. *. *. . *. . . *. **. * 2. A Simple Producer Benefit Measure . . **. ***. ****. ***********. ******. * 8 3. Willingness to P~v Functions and Marginal Cost Functions *********** 15 4. Approximate Benefit Measures 30 5. Problems with the Producer Benefit Measure ************* ! *********** 41 5. 1. Static versus Dynamic Benefit Measures ******************* 41 5. 2. The Problem of Endogenous Prices for Local Goons ********* 48 5. 3. The Neglect of Consumer Benefits' ************************* 56 6. Alternative Approaches to Benefit Measurement ********************** 70 6. 1. The Questionnaire or Sample Survey Approach ************** 70 6. 2. Ex Post Accounting Approaches **************************** 72 6. 3. Engineering and Mathematical Programming Approaches ****** 74 6. 4. The Applied General Equilibrium Modelling Approach ~ ****** 75 6. 5. The Differential Approach ******************************** 77 6. 6. The Econometric Approach . . *********. *. ******. *********. ** 79 7.

This is the first in a sequence of volumes about the official statistics measures of inflation and productivity for nations. The focus of this volume is on accounting for owner occupied housing in the inflation measures of nations: one of the least settled topics in official statistics. The volume provides an introduction to current practices and associated problems.