Panel (b) of Figure 1.3 shows a price index of houses. The late Karl Case of Wellesley College and Robert Shiller of Yale University developed this index. Many economists consider changes in the average price of houses in the United States to be difficult to measure. What challenges might exist in accurately measuring housing prices?

Figure 1.3

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220 200 180 160 140 120 100 2003 2013 2015 2005 2007 2009 2011 (b) Index of home prices Index of home prices (January 2000 = 100)