Paaschetyyppinen

Paaschetyyppinen refers to a type of index number calculation that uses a specific formula to measure price or quantity changes over time. This method, developed by German economist Hermann Paasche, is known for its use of current-period weights. In contrast to Laspeyres-type indexes which use base-period weights, Paasche indexes incorporate the quantities or values of the current period into the calculation.

The Paasche index formula for prices is calculated by dividing the cost of a current-period basket of goods at current prices by the cost of the same basket at base-period prices. Similarly, a Paasche quantity index is calculated by dividing the value of current quantities at current prices by the value of base quantities at current prices. This characteristic of using current weights means that Paasche indexes are often considered to be more representative of the current economic situation.

However, a significant drawback of the Paasche index is its need for frequent recalculation. Because the weights change with each period, updating the index requires collecting new data on quantities and prices for every period. This makes it more computationally intensive and data-demanding than a Laspeyres index. Due to these data requirements, Paasche indexes are less commonly used for official statistics than Laspeyres indexes, though they can be valuable for specific analytical purposes where the focus is on contemporary consumption patterns.