We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is an Adjustment Index?

Jim B.
By
Updated Feb 11, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

An adjustment index is a mathematical adjustment made to a piece of data meant to render that data more reflective of actual circumstances. The index will essentially change the data according to some sort of benchmark statistic or real-world situation that might otherwise skew the results of the data. Once the adjustment index has been used, the resulting numbers should give an accurate rendering of the thing they are meant to measure. These indexes are used on everything from individual mortgages and life insurance policies to macroeconomic statistics like inflation and price indexes.

Statisticians and mathematicians generally believe that numbers can provide true insight on any situation. The only caveat with that belief is that a statistic is usually only as effective as the data used to compile it. If there are circumstances that might skew the data somewhat, any conclusions drawn from it could conceivably be faulty. Since that is the case, these numerical experts have come up with ways of taking into account circumstances that might be affecting the numbers. An adjustment index is intended to render important statistics in the most accurate manner possible.

One simple way of thinking of an adjustment index is to consider the way a handicap is used in golf. The handicap is essentially meant to even the playing field for golfers of all skills. It allows a novice to compete with an expert golfer by giving the novice a certain amount of strokes. In similar fashion, the world of sports betting uses odds and point spreads as ways of leveling out betting interests.

People are often affected by an adjustment index in their lives without being aware of it. Those homeowners who have adjustable rate mortgages may see the interest they pay each month rise and fall. This is because some benchmark interest rate is determining the individual rate paid by the homeowners. Life insurance policies often determine their rates by adjusting them as the policy-holders age and are at a greater risk of dying.

On a larger level, economists are likely to use an adjustment index to produce statistics that provide a true sense of certain economic factors. As an example, economic growth is often measured by Gross Domestic Product, or GDP, and is measured in terms of how it is rising or falling from year to year. Since excess inflation would dampen the effects of economic growth, an index is used to factor inflation into the GDP, producing what is known as the Real GDP. Indexes are used in similar fashion whenever mitigating circumstances might alter key economic measurements.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Link to Sources
Jim B.
By Jim B.
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own successful blog. His passion led to a popular book series, which has gained the attention of fans worldwide. With a background in journalism, Beviglia brings his love for storytelling to his writing career where he engages readers with his unique insights.
Discussion Comments
Jim B.
Jim B.
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.