Letter: A democratic measure of household income growth

Chris Giles, in his article on household cost indices, misses the most important use of a democratic price or cost index (“Measurement matters”, Opinion, FT.com, May 21). If it is used to deflate the geometric mean of household incomes, the resulting “real” series provides a basis for calculating the average of each household’s real income growth. You might want to call this a democratic measure of household income growth. Unlike more conventional measures which are biased towards the growth experiences of the rich, this gives equal weight to everyone. The calculations are very straightforward and it would be good to see this published on a regular basis.

Martin Weale
Professor of Economics, King’s College London, London WC2, UK