Handling Economic Data - Calculating and Using Index Numbers
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Index numbers are a useful way of expressing economic data time series and comparing / contrasting information
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Handling Economic Data - Calculating and Using Index Numbers
- 1. Handling Economic Data – Index Numbers Year 1 Economics
- 2. Basics of Index Numbers 1. Index numbers are a useful way of expressing economic data time series and comparing / contrasting information 2. An index number is a figure reflecting price or quantity compared with a base value 3. The base value always has an index number of 100 4. The index number is then expressed as 100 times the ratio to the base value 5. Note that index numbers have no units e.g. £, Euros or $ • FTSE-100 Share Index • Consumer Prices Index (CPI) • Exchange Rate Index • Index of House Prices • Index of Property Rents • Index of GDP or GNI • Human Development Index (HDI) • Index of Production in Manufacturing Examples
- 3. Calculating an Index Number Year Average UK House Price (£s) Index of UK House Prices (2007=100) 2007 192,651 100.0 2008 194,658 101.0 2009 159,961 82.2 2010 167,973 105.0 2011 162,915 97.0 2012 161,648 99.2 2013 163,593 101.2 Index number in Year Y = (Data Value in Year Y / Base Year Value)*100 The chosen base year Large fall – housing slump A recovery in house prices but little higher than 2007
- 4. Index of UK Production by Main Economic Sector 80 85 90 95 100 105 110 115 Q12008 Q22008 Q32008 Q42008 Q12009 Q22009 Q32009 Q42009 Q12010 Q22010 Q32010 Q42010 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 Q42013 Q12014 Q22014 Q32014 Q42014 Q12015 Q22015 Q32015 Q42015 Index of Output at Constant Prices, 2008 Quarter 1 = 100 Manufacturing Production Construction Services
- 5. Index Numbers: UK Real Disposable Income Per Head Data is for the 1st quarter of each year • The table shows annual figures for real disposable income per head • Real disposable income measures incomes after taxes and welfare benefits and also adjusted for the effects of inflation • The base year for the data is 2010 • The data shows that real disposable income per head of population fell in 2011 and 2012. This indicates a decline in the real standard of living • Real Disposable Income per head recovered in 2015 but (in July 2015) remained marginally below the 2010 level. Year Real Disposable Income Per Capita 2008 100.1 2009 97.8 2010 100.0 2011 98.5 2012 95.8 2013 97.1 2014 96.5 2015 98.4 Source: Office for National Statistics, July 2015
- 6. UK Employment, Real Incomes & Consumption 90.0 92.0 94.0 96.0 98.0 100.0 102.0 104.0 106.0 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 LFS employment Real household disposable income Real consumption Real GDP Index, 2008 Quarter 1 = 100 The chart shows that real household disposable income has been flat in recent years. Indeed in Q2 2015 it was only just above the level achieved in the first quarter of 2008 just before the recession.
- 7. Handling Economic Data – Index Numbers Year 1 Economics