Future Directions

This final chapter discusses the future prospects and expectations for index and aggregation theory analysis, highlighting the gap between academic researchers and official statistics producers. It emphasizes the need for indices grounded in economic theory and addresses the challenges in their practical implementation. Traditional cost-of-living indices assume homothetic preferences, but recent studies stress the importance of non-homothetic preferences, which consider varying income elasticities and are crucial for analyzing income inequalities. The chapter also explores significant quality improvements in durable goods in the long run and the difficulties in measuring these improvements using traditional methods, suggesting the potential role of Artificial Intelligence and machine learning. Furthermore, it highlights the unrealistic assumption of fixed consumer preferences in standard cost-of-living indices, advocating for indices that account for changing preferences. It proposes creating different price indices for various households or regions to accurately measure income and consumption disparities, noting the significance of detailed household consumption data. The chapter concludes by emphasizing the importance of index number theory in the practical world and the need for more researchers specializing in this field. It calls for integrating economic theory with data aggregation and encourages researchers to become not only users but also makers of indices. This ongoing research and collaboration between academia and statistical offices are essential for developing accurate and theoretically sound indices.