Substitution bias

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Substitution bias describes a bias in economics index numbers arising from tendency to purchase inexpensive alternatives for expensive items when prices change.

Substitution bias occurs when two or more items experience a change of price relative to each other. Consumers will consume more of the now comparatively inexpensive good and less of the now relatively more expensive good.

Because of its effect on consumption, substitution bias can cause inflation to be overestimated.