What Are The Differences Between Laspeyres Index And Paasche Index?


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1. Lasp eyres utilizes quantities in the base year (out of date weights). It assumes quantity is held constant.  Paasche on the other hand uses up to date weights i.e utilizes quantities in the current year.    2. Because Pa ache uses current weight values and Lasp eyres uses out of date weight values, one tends to over estimate and the other tends to underestimate.    3. Pa ache is more tedious to calculate and time consuming since you have to collect data for all years that are needed.

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