QUALITY ADJUSTED OUTPUT
The measurement of output for the service industries poses some particular problems in relation to changes in quality. Identifying and capturing changes in the quality of services is difficult in both concept and practice. Although some adjustments for quality are captured in the price data used to deflate the current price estimates, the difficulties involved are such that the final measure of industry output may not adequately capture all quality changes.
It is particularly difficult to perform accurate quality adjustment for service industries, as change in the quality of service is very difficult to measure in an objective way. Techniques such as analysing component change, overlapping sales or hedonic regression analysis, which are the normal methods for quality adjustment, may be ineffective at providing an accurate adjustment level because of the intangible nature of the product and the data required. If the extent of quality change is not completely captured in the data, output growth and MFP may be understated.
Print Page
Print All