The Dow is price-weighted because it was started before computers. Add 30 prices and divide by adjustment factor is the easiest to calculate. Also, it was the first index, before people realized other methods are more accurate.
Now it has to stay that way for backward compatibility.
It is backward-compatible, because they adjust the divisor to compensate, so that the index value pre-rebalancing is the same as the index value post-rebalancing.
If they never adjusted the list of stocks, it would eventually become irrelevant as stocks go bankrupt or are acquired. Only 1 current Dow member was in the index in 1907 (GE), and 4 current Dow members were in the index before 1939 (XOM, PG, DD).
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The Dow is price-weighted because it was started before computers. Add 30 prices and divide by adjustment factor is the easiest to calculate. Also, it was the first index, before people realized other methods are more accurate.
Now it has to stay that way for backward compatibility.
Multiply 30 prices by shares outstanding, and add, is not substantially harder computation to do once a day.
Changing ATT to AAPL isn't backward compatible.
What compatibility is there to maintain? Nothing important depends on the value of the DJIA from before last week.
It is backward-compatible, because they adjust the divisor to compensate, so that the index value pre-rebalancing is the same as the index value post-rebalancing.
If they never adjusted the list of stocks, it would eventually become irrelevant as stocks go bankrupt or are acquired. Only 1 current Dow member was in the index in 1907 (GE), and 4 current Dow members were in the index before 1939 (XOM, PG, DD).