What is the hedonic method and why is it sometimes used to track changes in the Consumer Price Index?© BrainMass Inc. brainmass.com October 25, 2018, 6:22 am ad1c9bdddf
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Hedonic Pricing method can be described as a tool that is used by the government economic statisticians to overcome the problem of tracking down the prices of goods over time whenever the actual good evolve (The Distributed, n.d.). It can also be defined as a method used in the estimation of economic values for ecosystem or sometimes environmental services that directly affect market prices. By using hedonic method, one gathers data from the market place, no questionnaires involved and also there is no need to build a hypothetical market. Hedonic pricing method is mostly applied to variations in housing prices that reflect such values as local environment attributes. Hedonic pricing method can be used to estimate economic benefits that are associated with the environmental quality and amenities. One of the elements of hedonic pricing method is that the price of a marketed god is related the services that it provides. A good example would be a house that in essence provides the characteristics of the house such as good design, painting, and architecture and so on. Therefore, we can be able to look at the house ...
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