Laspeyrenindeksiä

Laspeyrenindeksiä, often referred to as the Laspeyres index, is a price index formula used in economics to measure the change in prices over time. It is named after the German economist Étienne Laspeyres, who developed it in the late 19th century. The index is calculated by comparing the cost of a basket of goods and services in the current period to the cost of the same basket in a base period. The base period is a reference point in time against which price changes are measured.

The formula for the Laspeyres index involves summing the products of the quantity of each good in the base period and its current price, then dividing this sum by the sum of the products of the quantity of each good in the base period and its price in the base period. Mathematically, it is represented as: L = (Σ(P_t * Q_0)) / (Σ(P_0 * Q_0)), where P_t is the price in the current period, Q_0 is the quantity in the base period, and P_0 is the price in the base period.

A key characteristic of the Laspeyres index is that it uses fixed quantities from the base period as weights. This means it does not account for changes in consumption patterns or the substitution of cheaper goods that may occur when prices rise. Because of this, the Laspeyres index is often considered to overstate inflation, as it does not reflect consumers' ability to switch to relatively less expensive alternatives. Despite this limitation, it remains a widely used index for its simplicity in calculation and its direct reflection of current prices on a fixed basket of goods. It is commonly used in the calculation of consumer price indices (CPIs).