Definitions for substitution bias
sub·sti·tu·tion bias

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1. Substitution bias

   Substitution bias describes a possible bias in economic index numbers if they do not incorporate data on consumer expenditures switching from relatively more expensive products to cheaper ones as prices changed. Substitution bias occurs when prices for items change relative to one another. Consider how consumer expenditures are reflected in a consumer price index. Consumers will tend to buy more of the good whose price declined, and less of the now relatively more expensive good. This change in consumption may not be reflected in the longstanding market basket from which a consumer price index is constructed. If a selected good is bought by consumers and it is therefore included in the CPI basket, but when an increase in price of that selected good occurs customers may buy a cheaper substitute, while the CPI basket may not quickly capture this change. If product A is purchased by most consumers, and similar product B goes on sale making it cheaper, consumers will naturally buy what is cheaper. Substitution bias can cause inflation rates to be over-estimated. Data collected for a price index, if from an earlier period, may poorly correspond to the prices and consumer-expenditure-shares going to goods whose prices later changed. To reduce this problem, several steps can be taken by makers of price indexes: Collect price data and expenditure data frequently to capture recent changes, and incorporate both into the indexes quickly Adopt superlative index formulas for price indexes, usually Tornqvist indexes or Fisher indexes Use hedonic index methods to capture attributes of products and their implicit prices; see hedonic regression and the related index problem of quality bias.

How to pronounce substitution bias?

1. Alex

   US English

   David

   US English

   Mark

   US English

   Daniel

   British

   Libby

   British

   Mia

   British

   Karen

   Australian

   Hayley

   Australian

   Natasha

   Australian

   Veena

   Indian

   Priya

   Indian

   Neerja

   Indian

   Zira

   US English

   Oliver

   British

   Wendy

   British

   Fred

   US English

   Tessa

   South African

How to say substitution bias in sign language?

Numerology

1. Chaldean Numerology

   The numerical value of substitution bias in Chaldean Numerology is: 8

2. Pythagorean Numerology

   The numerical value of substitution bias in Pythagorean Numerology is: 4

References

1. ^ Wikipedia
   https://en.wikipedia.org/wiki/Substitution_Bias