## The Plutocratic Bias in the CPI: Evidence from Spain

_IMF Working Papers, October 1, 2000_

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## Bibliographic details
- Authors: Javier Ruiz Castillo, Eduardo Ley, Mario Izquierdo
- Published: October 1, 2000
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451858174.001

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### Summary
- The authors define the plutocratic bias as the difference between inflation measured according to the current official CPI and a democratic index in which all households receive the same weight.
- The paper finds that during the 1990s the plutocratic bias in Spain amounts to 0.055 percent per year.
- Positive and negative biases cancel off when averaging over the whole period; the mean absolute bias is 0.090.
- Most of the oscillations experienced by the plutocratic bias can be explained by the price behavior of three goods: a luxury good and two necessities.

### Key findings
- Definition: plutocratic bias = official CPI inflation − democratic-index inflation (equal household weights).
- Estimated central tendency for the 1990s: 0.055 percent per year (plutocratic bias).
- Mean absolute magnitude over the period: 0.090.
- Temporal variation primarily driven by three goods: one luxury good and two necessities.

### Methodological notes and scope
- The analysis compares the official CPI with a democratic index that weights households equally.
- The investigation attributes the main oscillations in the plutocratic bias to the price behavior of a small set of commodities (specified as a luxury good and two necessities).

### Quantitative results and interpretation
- Plutocratic bias (1990s): 0.055 percent per year.
- Mean absolute bias (whole period): 0.090.
- Net average bias over the whole period is close to zero due to cancellation of positive and negative biases, despite larger mean absolute deviations.

*The Plutocratic Bias in the CPI: Evidence from Spain, Javier Ruiz Castillo, Eduardo Ley, Mario Izquierdo, October 1, 2000.*

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## Content in this bundle

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/the-plutocratic-bias-in-the-cpi-evidence-from-spain-3823_