Characteristicity versus universality trade-off
In the context of PPP calculation, the characteristicity versus universality trade-off refers to the trade-off between maintaining the characteristicity of binary comparisons and the universality of multilateral comparisons. Here:
- Characteristicity means an index more faithfully represents the constituent countries, i.e. the index is more characteristic of those countries. Binary comparisons have more characteristicity because the index is only about the two countries in question, whereas a multilateral index incorporates information from other countries that aren't directly being compared.
- Universality means all countries are compared according to a "common standard".
The term "country characteristicity" was introduced by Drechsler in 1975 or 1973 (Drechsler, László. "Weighting of index numbers in multilateral international comparisons". Review of income and wealth.).:73
The trade-off is covered in the United Nations International Comparison Project Phase III, published in 1982.:101
- Kravis, Irving B.; Heston, Alan; Summers, Robert (1982). "World Product and Income: International Comparisons of Real Gross Product (United Nations International Comparison Project Phase III)" (PDF). Johns Hopkins University Press. Retrieved November 5, 2017.