Study on Taiwan Consumers' True Cost of Living:An Application of the Generalized Fechner-Thurstone(GFT) Direct Utility Function

• Main Authors: Jui-Hui Chen, 陳瑞惠
• Other Authors: Pang-Tien Lieu
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/07045908185483499155

博士 === 國立臺灣科技大學 === 企業管理系 === 96 === This paper studies cost of living standards and variations in growth trends for consumers in Taiwan between 1951 and 2001 by considering consumer’s preference to be or not to be a variable. The comparison and analysis are made by using the two Konyus TCLIs with constant preferences and variable preferences constructed on the basis of the Generalized Fechner-Thurstone (GFT) direct utility function -- GFT(Pk0) and GFT(Pk1), as well as the Laspeyres and Paasche price indexes. This study shows that ignoring changes in preference structure frequently leads to the underestimation of the consumer’s true cost of living standards and growth scales in Taiwan. When changes in preference structure are taken into consideration, as was done in studies by Phlips and Sanz-Ferrer (1975) and Heien and Dunn (1985) in the U.S., the Laspeyres price index may underestimate, not overestimate, the true cost of living standards and the growth scale in Taiwan for the 1980s and 1990s. Based on the above findings, when it is necessary to apply the cost of living adjustment clause to all relevant programs, an alternative index such as the nonparametric TCLI – GFT(Pk1) studied in this paper may be more appropriate than the usual Laspeyres CPI. Therefore, it would be suggested that the statistical authorities in Taiwan should also consider routinely compiling and publishing the nonparametric TCLI – GFT(Pk1), together with the Laspeyres CPI.