Statistics Statistics (from German language, German: ''wikt:Statistik#German, Statistik'', "description of a State (polity), state, a country") is the discipline that concerns the collection, organization, analysis, interpretation, and presentation of ...

Economics Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and intera ...

and

Finance Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fina ...

, an index is a statistical measure of change in a representative group of individual data points. These data may be derived from any number of sources, including company performance, prices, productivity, and employment. Economic indices track economic health from different perspectives. Influential global financial indices such as the Global Dow, and the

NASDAQ Composite The Nasdaq Composite ( ticker symbol ^IXIC) is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange. Along with the Dow Jones Industrial Average and S&P 500, it is one of the three most-followed stock market ind ...

track the performance of selected large and powerful companies in order to evaluate and predict

economic trend *all the economic indicators that are the subject of economic forecasting **see also: econometrics *general trends in the economy, see: economic history Economic history is the academic learning of economies or economic events of the past. R ...

s. The

Dow Jones Industrial Average The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow (), is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity inde ...

and the

S&P 500 The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. As of D ...

primarily track U.S. markets, though some legacy international companies are included. The

consumer price index A consumer price index (CPI) is a price index, the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time. Overview A CPI is a statistica ...

tracks the variation in prices for different consumer goods and services over time in a constant geographical location and is integral to calculations used to adjust salaries, bond interest rates, and tax thresholds for inflation. The

GDP Deflator In economics, the GDP deflator (implicit price deflator) is a measure of the money price of all new, domestically produced, final goods and services in an economy in a year relative to the real value of them. It can be used as a measure of the va ...

Index, or real GDP, measures the level of prices of all-new, domestically produced, final goods and services in an economy. Market performance indices include the labour market index/ job index and proprietary

stock market index In finance, a stock index, or stock market index, is an index that measures a stock market, or a subset of the stock market, that helps investors compare current stock price levels with past prices to calculate market performance. Two of the ...

investment instruments offered by

brokerage house A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be confu ...

s. Some indices display market variations. For example, the

Economist An economist is a professional and practitioner in the social sciences, social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this ...

provides a Big Mac Index that expresses the adjusted cost of a globally ubiquitous Big Mac as a percentage over or under the cost of a Big Mac in the U.S. in

USD The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...

(estimated: $3.57). The least relatively expensive Big Mac price occurs in Hong Kong, at a 52% reduction from U.S. prices, or $1.71 U.S. Such indices can be used to help forecast currency values.

Index numbers

An index number is an

economic data Economic data are data describing an actual economy, past or present. These are typically found in time-series form, that is, covering more than one time period (say the monthly unemployment rate for the last five years) or in cross-sectional data ...

figure Figure may refer to: General *A shape, drawing, depiction, or geometric configuration *Figure (wood), wood appearance *Figure (music), distinguished from musical motif *Noise figure, in telecommunication *Dance figure, an elementary dance pattern ...

reflecting

price A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the c ...

or quantity compared with a standard or base value. The base usually equals 100 and the index number is usually expressed as 100 times the

ratio In mathematics, a ratio shows how many times one number contains another. For example, if there are eight oranges and six lemons in a bowl of fruit, then the ratio of oranges to lemons is eight to six (that is, 8:6, which is equivalent to the ...

to the base value. For example, if a

commodity In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. The price of a comm ...

costs twice as much in 1970 as it did in 1960, its index number would be 200 relative to 1960. Index numbers are used especially to compare business activity, the

cost of living Cost of living is the cost of maintaining a certain standard of living. Changes in the cost of living over time can be operationalized in a cost-of-living index. Cost of living calculations are also used to compare the cost of maintaining a cer ...

, and

employment Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any othe ...

. They enable economists to reduce unwieldy business data into easily understood terms. In

economics Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and intera ...

, Index numbers generally are

time series In mathematics, a time series is a series of data points indexed (or listed or graphed) in time order. Most commonly, a time series is a sequence taken at successive equally spaced points in time. Thus it is a sequence of discrete-time data. Exa ...

summarizing movements in a group of related variables. The best-known index number is the

, which measures changes in

retail price A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the ...

s paid by consumers. In addition, a cost-of-living index (COLI) is a price index number that measures the relative cost of living over time.Turvey, Ralph. (2004)
Consumer Price Index Manual: Theory And Practice.
' Page 11. Publisher:

International Labour Organization The International Labour Organization (ILO) is a United Nations agency whose mandate is to advance social and economic justice by setting international labour standards. Founded in October 1919 under the League of Nations, it is the first and o ...

. . In contrast to a COLI based on the true but unknown utility function, a superlative index number is an index number that can be calculated. Thus, superlative index numbers are used to provide a fairly close approximation to the underlying cost-of-living index number in a wide range of circumstances. Some indexes are not time series. Spatial indexes summarize real estate prices, or toxins in the environment, or availability of services, across geographic locations. Indexes may also be used to summarize comparisons between distributions of data within categories. For example,

purchasing power parity Purchasing power parity (PPP) is the measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries' currency, currencies. PPP is effectively the ratio of the price of ...

comparisons of currencies are often constructed with indexes. There is a substantial body of economic analysis concerning the construction of index numbers, desirable properties of index numbers and the relationship between index numbers and economic theory. A number indicating a change in magnitude, as of price, wage, employment, or production shifts, relative to the magnitude at a specified point usually taken as 100.

Index number problem

The index number problem is the term used by economists to describe the limitation of statistical indexing, when used as a measurement for cost-of-living increases. For example, in the Consumer Price Index, a reference year's "market basket" is assigned an index number of 100. In 2019 if a market basket price is 55 and the basket were to double the following year, in 2020, then the index would rise to 200. This is done by performing a simple calculation: Dividing the new year market basket price by the reference year's (otherwise known as the base year) price, and subsequently multiplying the quotient by 100. While the CPI is a conventional method to measure inflation, it doesn't express how price changes directly affect all consumer purchases of goods and services. It either understates or overstates cost-of-living increases. This is the limitation of the CPI that is described as the index number problem. There is no theoretically ideal solution to this problem. In practice for retail price indices, the "basket of goods" is updated incrementally every few years to reflect changes. Nevertheless, the fact remains that many economic indices taken over the long term are not really like-for-like comparisons and this is an issue taken into account by researchers in

economic history Economic history is the academic learning of economies or economic events of the past. Research is conducted using a combination of historical methods, statistical methods and the application of economic theory to historical situations and i ...

Indices

Provider: Dow Jones *

Provider:

Standard & Poor's S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities. S&P is con ...

S&P 400 The S&P MidCap 400 Index, more commonly known as the S&P 400, is a stock market index from S&P Dow Jones Indices. The index serves as a gauge for the U.S. mid-cap equities sector and is the most widely followed mid-cap index. To be included in ...

S&P 600 The S&P SmallCap 600 Index (S&P 600) is a stock market index established by Standard & Poor's. It covers roughly the small-cap range of American stocks, using a capitalization-weighted index. To be included in the index, a stock must have a total ...

S&P 1500 The S&P 1500, or S&P Composite 1500 Index, is a stock market index of US stocks made by Standard & Poor's. It includes all stocks in the S&P 500, S&P 400, and S&P 600. This index covers approximately 90% of the market capitalization of U.S. stock ...

S&P/ASX 200 The S&P/ASX 200 index is a market-capitalization weighted and float-adjusted stock market index of stocks listed on the Australian Securities Exchange. The index is maintained by Standard & Poor's and is considered the benchmark for Australi ...

S&P/TSX Composite Index The S&P/TSX Composite Index is the benchmark Canadian index, representing roughly 70% of the total market capitalization on the Toronto Stock Exchange (TSX) with about 250 companies included in it. The Toronto Stock Exchange is made up of over 1, ...

* S&P Global 1200 * S&P Custom Group of indices * S&P Leveraged Loan Index *

Case–Shiller index The Standard & Poor's CoreLogic Case–Shiller Home Price Indices are repeat-sales house price indices for the United States. There are multiple Case–Shiller home price indices: A national home price index, a 20-city composite index, a 10 ...

Provider:

Russell Investments Russell Investments is an investment firm headquartered in Seattle, Washington. Corporate overview According to ''American Banker'', Russell Investments has approximately $300 billion of assets under management, as of September 2019. The firm r ...

Russell 1000 Index The Russell 1000 Index is a stock market index that tracks the highest-ranking 1,000 stocks in the Russell 3000 Index, which represent about 93% of the total market capitalization of that index. , the stocks of the Russell 1000 Index had a weighted ...

Russell 2000 Index The Russell 2000 Index is a small cap company , small-cap stock market index that makes up the smallest 2,000 stocks in the Russell 3000 Index. It was started by the Frank Russell Company in 1984. The index is maintained by FTSE Russell, a subsi ...

Russell 3000 Index The Russell 3000 Index is a Capitalization-weighted index, capitalization-weighted stock market index that seeks to be a benchmarking, benchmark of the entire Stock markets in the United States, U.S stock market. It measures the performance of the ...

Russell Midcap Index The Russell Midcap Index measures performance of the 800 smallest companies (approximately 27% of total capitalization) in the Russell 1000 Index. , the stocks of the Russell Midcap Index have a weighted average market capitalization of approximate ...

* Russell Microcap Index * Russell Global Index * Russell Developed Index * Russell Europe Index * Russell Asia Pacific Index * Russell Emerging Markets Index Provider:

FTSE Group FTSE International Limited trading as FTSE Russell ( "Footsie") is a British provider of stock market indices and associated data services, wholly owned by the London Stock Exchange (LSE) and operating from premises in Canary Wharf. It operat ...

* FTSE 100 Index * FTSE 250 Index *

FTSE 350 Index The FTSE 350 Index is a market capitalization weighted stock market index made up of the constituents of the FTSE 100 and FTSE 250 indices. The FTSE 100 Index comprises the largest 100 companies by capitalization which have their primary listing on ...

FTSE AIM UK 50 Index The FTSE AIM UK 50 Index was introduced on 16 May 2005, and is a market capitalisation, market-capitalisation-weighted stock market index. The index incorporates the largest 50 UK companies (by capitalisation) which have their primary listing o ...

FTSE All-Share Index The FTSE All-Share Index, originally known as the FTSE Actuaries All Share Index, is a capitalisation-weighted index, comprising around 600 of more than 2,000 companies traded on the London Stock Exchange (LSE). Since 29 December 2017 the constitue ...

FTSE/Athex Large Cap The FTSE/Athex Large Cap is the stock index of the twenty-five largest companies on the Athens Stock Exchange. the stocks comprising this index are: Viohalco, Coca-Cola HBC AG, EYDAP, Terna Energy, Lamda Development S.A., Hellenic Petrol ...

FTSE Bursa Malaysia Index The FTSE Bursa Malaysia Index is a comprehensive range of real-time indices, which cover all eligible companies listed on the Bursa Malaysia Main Board which was introduced to Bursa Malaysia's investors in 2006. The indices are to measure the pe ...

FTSE Fledgling Index The FTSE Fledgling Index comprises companies listed on the main market of the London Stock Exchange (LSE) which qualify as eligible for inclusion in the FTSE UK series but are too small to be included in the FTSE All-Share Index. There is no liquidi ...

FTSE Italia Mid Cap The FTSE Italia Mid Cap is a stock market index for the Borsa Italiana, the main stock exchange of Italy. It is one of the indices in the FTSE Italia Index Series. Components The index consists of listings See also * FTSE MIB The F ...

FTSE MIB The FTSE MIB (Milano Indice di Borsa) (the S&P/MIB prior to June 2009) is the benchmark stock market index for the Borsa Italiana, the Italian national stock exchange, which superseded the MIB-30 in September 2004. The index consists of the 40 mo ...

FTSE SmallCap Index The FTSE SmallCap Index is an index of small market capitalisation companies consisting of the 351st to the 619th largest-listed companies on the London Stock Exchange main market. The index, which is maintained by FTSE Russell, a subsidiary of ...

* FTSE techMARK 100 *

FTSE4Good Index The FTSE4Good Index Series is a series of ethical investment stock market indices launched in 2001 by the FTSE Group which reports on the performance of companies which demonstrate "strong Environmental, Social and Governance practices". A numbe ...

FTSEurofirst 300 Index FTSE International Limited trading as FTSE Russell ( "Footsie") is a British provider of stock market indices and associated data services, wholly owned by the London Stock Exchange (LSE) and operating from premises in Canary Wharf. It operates ...

Provider: STOXX Limited * EURO STOXX 50 *

STOXX Europe 50 The STOXX Europe 50 is a stock index of European stocks designed by STOXX Ltd., an index provider owned by Deutsche Börse Group and SIX Group. The index was introduced in February 1998. The STOXX Europe 50 index provides a blue-chip representa ...

* STOXX Europe 600 * STOXX Global 1800 Provider:

Morgan Stanley Capital International MSCI Inc. is an American finance company headquartered in New York City. MSCI is a global provider of equity, fixed income, real estate indexes, multi-asset portfolio analysis tools, ESG and climate products. It operates the MSCI World, MSCI ...

* MSCI World Index * MSCI EAFE (Europe, Australasia, and Far East) Index Provider:

Bombay Stock Exchange BSE Limited, also known as the Bombay Stock Exchange (BSE), is an Indian stock exchange. It is located on Dalal Street in Mumbai. Established in 1875 by cotton merchant Premchand Roychand, a Jain businessman, it is the oldest stock exchange in ...

BSE SENSEX The BSE SENSEX (also known as the S&P Bombay Stock Exchange Sensitive Index or simply SENSEX) is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange. The 30 ...

Provider:

Reuters Reuters ( ) is a news agency owned by Thomson Reuters Corporation. It employs around 2,500 journalists and 600 photojournalists in about 200 locations worldwide. Reuters is one of the largest news agencies in the world. The agency was estab ...

* Reuters-CRB Commodities Index Provider:

Markit Markit Ltd. was a British financial information and services company with over 4,000 employees, founded in 2003 as an independent source of credit derivative pricing. The company provides independent data, trade processing of derivatives, fo ...

* ABX * CDX /

iTraxx iTraxx (Thomson Reuters Eikon code 'ITRAXX'; Bloomberg code 'ITRX') is the brand name for the family of credit default swap index products covering regions of Europe, Australia, Japan and non-Japan Asia. Credit derivative indexes form a large se ...

* CMBX Provider: Historic Automobile Group * HAGI Top Index Provider: CRYX * CRYX5 * CRYX10 * CRYX25 * CRYX50 * CRYX100

References

External links

Humboldt Economic Index

Lars Kroijer

SG IndexDow Jones Indexes
{{DEFAULTSORT:Index (Economics) Business terms Economic growth Economic indicators Mathematical and quantitative methods (economics)

Index numbers

Index number problem

Indices

See also

References

Further reading

External links