The difference between fixed base method and chain base method are as follows:
| Fixed base method |
Chain base method |
| 1. The year with normal events is taken as the base year. |
1. The year preceding the current year for which the index is to be obtained, is taken as the base year. |
| 2. The base year remains constant for computing index number for the given time period. |
2. The base year keeps on changing for the given time period. |
| 3. Since the base year is fixed, uniformity is maintained in comparing changes in the values of a variable quantity. |
3. Since the base year is changing, uniformity is not maintained in comparing changes in the values of variable quantity. |
| 4. In this method, new items in demand cannot be included and old items out of use or having no preferences cannot be removed. |
4. This method permits inclusion of items in demand and exclusion of items out of use or having no preferences. |
| 5. The work of selection of a base year is difficult. |
5. The question of selecting a base year does not arise as it is automatically selected. |
| 6. The base year is to be changed with lapse of time. |
6. No such problem arises in this method. |
| 7. This method is quite useful for comparing long-term changes in the value of a variable quantity. |
7. This method is useful only for comparing short-term changes in the value of a variable quantity. |
| 8. It is easy to understand and easy in computation. |
8. In this method if there is any mistake in the calculations of Index number of one year then that mistake is carried on in all the subsequent years. |
