Index Numbers

Definition: Index numbers are statistical devices designed to measure the relative change in the level of variable or group of variables with respect to time, geographical location etc. In other words these are the numbers which express the value of a variable at any given period called “current period “as a percentage of the value of that variable at some standard period called “base period”.

Here the variables may be 1. The price of a particular commodity like silver, iron or group of commodities like consumer goods, food, stuffs etc. 2. The volume of trade, exports, imports, agricultural and industrial production, sales in departmental store. 3. Cost of living of persons belonging to particular income group or profession etc.

Methods of constructing index numbers: A large number of formulae have been derived for constructing index numbers. They can be 1) Unweighted indices 
a) Simple aggregative method  
b) Simple average of relatives. 

2) Weighted indices 
a) Weighted aggregative method
 i)  Lasperey‟s method 
ii) Paasche‟s method 
iii)  Fisher‟s ideal method 
iv) Marshal-Edgeworth meth 




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