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.
INVESTOPEDIA EXPLAINS '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.

Consumer Price Index  CPI
A measure that examines the weighted average of prices of a basket ... 
Index
A statistical measure of change in an economy or a securities ... 
Market Basket
A subset of products or securities that is designed to mimic ... 
Basket Of Goods
A relatively fixed set of consumer products and services valued ... 
Hedonic Pricing
A model identifying price factors according to the premise that ... 
Monopoly
A situation in which a single company or group owns all or nearly ...

What is the utility function and how is it calculated?
In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >> 
What are some of the more common types of regressions investors can use?
The most common types of regression an investor can use are linear regressions and multiple linear regressions. Regressions ... Read Full Answer >> 
What types of assets produce negative portfolio variance?
Assets that have a negative correlation with each other produce negative portfolio variance. Variance is one measure of the ... Read Full Answer >> 
When is it better to use systematic over simple random sampling?
Under simple random sampling, a sample of items is chosen randomly from a population, and each item has an equal probability ... Read Full Answer >> 
What are some common financial sampling methods?
There are two areas in finance where sampling is very important: hypothesis testing and auditing. The type of sampling methods ... Read Full Answer >> 
How can I measure portfolio variance?
Portfolio variance measures the dispersion of returns of a portfolio. It is calculated using the standard deviation of each ... Read Full Answer >>

Investing Basics
Economic Indicators That DoItYourself Investors Should Know
Understanding these investing tools will put the market in your hands. 
Economics
Why The Consumer Price Index Is Controversial
Find out why economists are torn about how to calculate inflation. 
Options & Futures
The Consumer Price Index: A Friend To Investors
As a measure of inflation, this index can help you make key financial decisions. 
Economics
What You Should Know About Inflation
Find out how this figure relates to your investment portfolio. 
Options & Futures
Explaining The World Through Macroeconomic Analysis
From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone. 
Mutual Funds & ETFs
ETF Analysis: Energy Select Sector SPDR
Find out more about the Energy Select Sector SPDR Fund, the top holdings of this exchangetraded fund and the characteristics of the fund. 
Investing News
The Financial Singularity Will Destroy Your Return
Given the current and future growth of financial technology, many believe algorithms will soon define what drives market outcomes. With a wealth of big data, algorithms would be able to create ... 
Economics
Explaining the Liquidity Coverage Ratio
The liquidity coverage ratio requires banks and other financial institutions to hold enough cash and liquid assets on hand to weather market stress. 
Fundamental Analysis
Calculating Valuation
Valuation is the process of determining what an asset is worth. 
Economics
Will the Selloff in China Hurt the Global Economy?
Though China is the world’s second largest economy, its volatility in the stock market is unlikely to have an impact on the global or Chinese economy.