26 BULLETIN 1351, U. S. DEPARTMENT OF AGRICULTURE 
Higher coefficients of correlation were obtained when a farm- 
products index was used to correct for changes in the price level, than 
when an all-commodities index was used. 
"Index numbers made from the prices of raw materials or of raw 
materials and slightly manufactured products must be expected to 
show wider oscillations than index numbers including a liberal repre- 
sentation of finished commodities," says Mitchell. 23 Thus the farm 
products relative would be expected to vary more than the index 
number of all commodities, which is desirable for the purposes of a 
price study. 
The fact that the farm-products relative is more susceptible to 
change caused by changes in the demand for farm products as a 
group is an argument in favor of this relative for purposes of estimat- 
ing the price of wheat or oats. On the other hand, the fact that 
wheat and oats have more influence to change the index number of 
farm products than to change the index of all commodities is an 
argument against using the farm-products index for price estimating 
purposes. 
The combination of an index of manufactured products to reflect 
changes in the purchasing power of money and some index to reflect 
changes in demand for the product under consideration should be 
more accurate for purposes of price estimating than either the farm- 
products or the all-commodities index. 
There was little difference in the correlation coefficients when the 
index number was run as a separate variable and when prices cor- 
rected by the index number were correlated directly. In most cases 
the index number was run as a separate variable because this method 
was more direct. 
23 "W C. Mitchell. Index numbers of wholesale prices in the United States and foreign countries. 1921. 
U. S. Bur. Labor Statis. Bui. 284. 
