A Modified Ideal Rank Index Number Formula
DOI:
https://doi.org/10.62054/ijdm/0102.13Keywords:
Biased, Index number, Rank index, Laspeyre’s and Paasche’s bounding testAbstract
This paper proposes an index number method called Asanya-Jibasen-Mbaga index, the method satisfied Laspeyre’s and Paasche’s bounding test which is unbiased compared to existing methods. The proposed index methods used expenditure/quantity and rank as weights and it satisfied all the tests of consistency of elementary index formulae. The proposed method was found to approximate the Fisher’s Ideal Price index (PF). The proposed method is an improvement on Jibasen –Gazali-Asanya rank price index. Numerical analyses conducted at low and high levels of aggregation revealed that the Jibasen-Gazali-Asanya rank price Index is biased and also failed Laspeyre’s and Paasche's bounding test. Thus, based on the results of the findings, Asanya-Jibasen-Mbaga index method is recommended as the appropriate functional form of the elementary index method among other existing elementary index methods
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