Yrjö O. Vartia (born June 3, 1946 in Helsinki, Finland) is the professor of econometrics in the Department of Political and Economic Studies at the

University of Helsinki The University of Helsinki (, ; UH) is a public university in Helsinki, Finland. The university was founded in Turku in 1640 as the Royal Academy of Åbo under the Swedish Empire, and moved to Helsinki in 1828 under the sponsorship of Alexander ...

, Finland.

Career

He received his B.S. (mathematics) in 1968 and his M.A. (statistics) in 1971 from the University of Helsinki and Licentiate of Philosophy and Ph.D. (statistics) from the University of Tampere, Finland in 1976. Associate professor of Statistics at the University of Helsinki in 1980. Professor of Statistics at the Helsinki School of Economics HSE in 1984 and professor of Economics (especially econometrics) at the University of Helsinki since 1987. He is student of Leo Törnqvist, the creator of the '' Törnqvist index''.

Research on Index Numbers

Vartia is best known for his 1983 paper in ''

Econometrica ''Econometrica'' is a peer-reviewed academic journal of economics, publishing articles in many areas of economics, especially econometrics. It is published by Wiley-Blackwell on behalf of the Econometric Society. The current editor-in-chief is ...

'', ''Efficient Methods of Measuring Welfare Change and Compensated Income in Terms of Ordinary Demand Functions''. It explains a numerical technique for solving a system of demand equations to derive the underlying utility function, i.e. for "calculating exact consumer welfare assuming the consumer faces a linear budget constraint". This is important because it greatly facilitates the measurement of changes in

welfare Welfare may refer to: Philosophy *Well-being (happiness, prosperity, or flourishing) of a person or group * Utility in utilitarianism * Value in value theory Economics * Utility, a general term for individual well-being in economics and decision ...

, a major part of the work of economists. More generally, Vartia's expertise is axiomatic

index numbers In economics, statistics, and finance, an index is a number that measures how a group of related data points—like prices, company performance, productivity, or employment—changes over time to track different aspects of economic health from var ...

, where he is known for his "consistency in aggregation" test and his discovery, along with Kazuo Sato of the "ideal log-change index", which utilised

logarithms In mathematics, the logarithm of a number is the exponent by which another fixed value, the base, must be raised to produce that number. For example, the logarithm of to base is , because is to the rd power: . More generally, if , the ...

and

logarithmic mean In mathematics, the logarithmic mean is a function of two non-negative numbers which is equal to their difference divided by the logarithm of their quotient. This calculation is applicable in engineering problems involving heat and mass t ...

to define the Sato-Vartia or "Vartia II" index (both 1976). He proposed also in his dissertation "Relative Changes and Index Numbers" in 1976 another index known as Montgomery-Vartia (or "Vartia I") index, which satisfies Time and Factor Reversal Tests and is Consistent in Aggregation. But it satisfies only a weaker form of Proportionality Test WPT along with, say, the factor antithesis FA(Törnqvist) of the '' Törnqvist index''. According to WPT, if both prices and quantities change proportionally, the price index must equal the common factor of proportionality. Montgomery-Vartia index was proposed independently in another notation by Montgomery in 1937. Both Sato-Vartia and Montgomery-Vartia indices are modifications and refinements of the '' Törnqvist index''.

References

{{DEFAULTSORT:Vartia, Yrjo Living people Date of birth missing (living people) 20th-century Finnish economists 1946 births Price index theory 21st-century Finnish economists