WP 2024-03.
Executive Summary
This paper reviews the neglected contributions to the theory of index numbers in Gottfried Haberler’s (1927) habilitation thesis Der Sinn der Indexzahlen (The Meaning of Index Numbers). Haberler was the first to present an argument for why the rates of change of the Paasche and Laspeyres indices can be interpreted as the lower and upper bounds of the actual change in the price level under certain assumptions. He thus provided a rationale, based on economic theory, for taking averages of the Paasche and Laspeyres indices, such as the Fisher index, as approximations to the actual rate of change. His argument is firmly rooted in the subjective value tradition of the Austrian school, but it requires preferences to be held constant. His line of argument provides a blueprint for what later became known as revealed preference theory developed by his student in the 1930s, Paul Samuelson.
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Gottfried Haberler’s Contributions to the Theory of Index Numbers
