DEFINITION of 'Hedonic Regression'
A method used to determine the value of a good or service by breaking it down into its component parts. The value of each component is then determined separately through regression analysis. For example, the value of a home can be determined by separating the different aspects of the home  number of bedrooms, number of bathrooms, proximity to schools  and using regression analysis to determine the value of each variable.
One of the more widelyrecognized examples of hedonic regression is the Consumer Price Index, which examines changes to the value of a basket of goods over time.
BREAKING DOWN 'Hedonic Regression'
The word "hedonic" refers to pleasure, which economists link to the perceived value each part a good or service has to someone. This sort of regression analysis provides a good  but not perfect  estimate of the value consumers place on a part of a whole.

Regression
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Residual Sum Of Squares  RSS
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