| Abstract: | This paper develops a model to forecast the likely quality rating of new automobiles. A scheme is devised and implemented for 1982 whereby the probability that a specific model will have one of five quality ratings is computed. The quality ratings are based on the trouble index computed by Consumer Reports based on a survey of its subscribers. A multinomial logit specification is used whereby the relative probability that a given level of quality is realized is a function of previous quality ratings, the location of the manufacturer of the automobile, the size of the automobile and the list price (or port-of-entry prices, in the case of imports). The forecast results when compared in a qualitative way to actual 1982 quality ratings prove to be acceptable. |
