Does Standard & Poor's underestimate the earnings of its S&P 500 Index? Or does one of the nation's most prominent finance scholars deserve an "F" in index arithmetic?

Those are the questions investors have been left with after a recent tussle between Standard & Poor's and Jeremy Siegel, a finance professor at the University of Pennsylvania's Wharton School of Business and author of Stocks for the Long Run.

The dustup started when the Wall Street Journal ran an op-ed piece by Siegel that argued Standard & Poor's uses a "bizarre" methodology for calculating the earnings and P/E ratio for the S&P 500.

Siegel explained that the earnings of S&P 500 companies are currently treated equally, but should instead be weighted in proportion to their market capitalization.

Market capitalization weighting, he noted, is used to measure the S&P 500 returns.

Such a system, he stated, would give larger weight to the earnings of a company such as Exxon-Mobil, and lower weight to an S&P 500 member such as Jones Apparel.

"In fact, a 10% rise in Exxon-Mobil's price would boost the S&P 500 by 4.64 index points, while the same fall in Jones Apparel would have no impact since the change is far less than the one-hundredth of one point to which the index is routinely rounded," Siegel wrote.

If capitalization weightings were applied to 2008, he noted, the earnings of S&P 500 companies would have been $71.10 per share instead of $39.73 per share.

"No one can deny that the recent economic downturn has badly hurt corporate earnings. But let's not fool ourselves into thinking that this is an expensive market," Siegel said. "When computed accurately, P/E ratios show that this market is much cheaper than is currently being reported by the S&P."

The opinion piece by Siegel-well known in the investment community for his consistently bullish stance on stocks-triggered a wave of Internet chatter, as well as a reply from Standard & Poor's.