Scanner Data-Based Panel Price Indexes

Abstract We construct panel price indexes using retail scanner data that allow comparisons of consumption cost across space and time. Two types of panel indexes are examined: the rolling-window panel extensions of the multilateral Cave-Christensen-Diewert index with the Törnqvist index as its elements, and of the multilateral Gini-Eltetö-Köves-Szulc index using the Fisher ideal index as its elements. The rolling window method maintains the nonrevisability of published index numbers while allowing index numbers for new periods and locations to be calculated and the basket of items to be updated. Meanwhile, the multilateral structure of price comparison eliminates significant downward drift in standard chained indexes. Using county-level bilateral and panel indexes based on retail beverage scanner data, we experimentally adjust for purchasing parity the portion of Supplemental Nutrition Assistance Program (SNAP) benefits that participants spend on beverages. Accounting for temporal and spatial cost differences causes over 2% of SNAP allotment spent on beverages to be reallocated, or approximately a 5% change in allotment on average for a county. About 90% of the relocated SNAP fund is to adjust for spatial differences in food cost. We also compare SNAP allotments implied by the retail scanner data indexes with those implied by indexes based on the USDA Quarterly Food-at-Home Price Database (QFAHPD). The treatment of unit values and product quality may have contributed to the significant differences observed between the retail scanner data indexes and the QFAHPD indexes.