Topic 7. Index method

7.1.Kinds of indices and the system of composite indices

7.2.Average weighted index

7.3.Indices of averages values

7.4.Index method of analysis

7.1. Index can be understood asthe relative value that characterizes the change of phenomenon in time, space and so on.

System of conventional symbols:

q - volumetric rate in physical terms,

p - price per unit,

pq (Q) - cost and turnover

z - cost per unit,

zq - total cost of production,

T - number of employees (time spent),

w - level of labor productivity.

Kinds of indices:

According to t he nature of comparison:

* Dynamic

* Territorial,

* Compared to a certain standard,

According to t he degree of generalization of population units:

* Individual (simple index),

* Composite index can be:

- General

- Group,

According to t he methods of modeling:

* Aggregative,

* Weighted average of the individual,

* Index of average level dynamics

The function of composite indices:

- Synthetic - a generalizing characteristic of a phenomenon change,

- Analytical - evaluation of an effect of separate factors on a received result.

Individual indices characterize the ratio of indicator levels for separate population units or for homogeneous groups.

Composite indices reflect generalized values change within the entire population.

Rules for modeling composite indices

* Indexed value is a sign, whose dynamics is studied,

* Weight - a value which allows us to generalize heterogeneous elements of population

Statistics studies cause-and-effect relations between phenomena and processes

In the economy any relationship between phenomena or indicators is both quantitative and qualitative at the same time.

Quantitative factors are extensive factors

Qualitative factors are intensity factors

Aggregative index is the main form of general indices.

- the total index of actual volume

Rule 1. If the quantitative factor changes, the corresponding quality factor must be defined for the base period.

- the general price index.

Rule 2. If the quality factor change, the corresponding quantitative factor must be defined for the current period.

- the general cost index (or turnover index)

The interconnection of indices:

*Multiplicative

*Additive:

The additive interconnection allows us to obtain the absolute values of changes of the indexed value.

System of indices:

Paasche system is used if:

- there is a structural change in the economy,

- - social issues are almost not taken into account.

Weight indicators in modeling Paasche system are taken into account during the current period.

Laspeyres system is used if:

- there are no significant structural changes in a country's economy

- social issues are taken into account together with economic ones.

Fischer system:

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