Re: poly: Modeling Economic Singularities

Peter M. asks:
>>No need to reinvent the wheel here. Economists have worked out
>>sophisticated methods for dealing with these issues, and I presumed that we
>>were talking about what the best methods would reveal about the total GDP
>>change.
>
> I'm trying to quantify the change in the average person's ability to
>accomplish his goals (where those goals don't conflict with goals of others).
>Can you point me to a method of measuring this that doesn't depend on
>arbitrary assumptions to create a standard of value that is stable across
>turbulent times? (I.e. something that avoid measuring value, or creates
>a reasonably objective standard of value that is more stable than, say,
>an hour of unskilled labor).

I'm hardly an expert on these things, but I think the basic idea is to
estimate demand curves. If all products stayed the same, and were consumed
in the same proportions, then per-person income change would just be the change
in the per-capita number of each item consumed. To deal with a changing mix
of products, I think one estimates demand elasticities, which describe how
the product value changes with quantity consumed. And to deal with changing
product quality, one estimates how demand varies with product characteristics.

On this last point, one of my econometrics texts, "The Practice of Econometrics"
by Berndt, has a chapter (#4) on "Constructing a Hedonic Price Index for
Computers".

Robin Hanson
hanson@econ.berkeley.edu http://hanson.berkeley.edu/
RWJF Health Policy Scholar, Sch. of Public Health 510-643-1884
140 Warren Hall, UC Berkeley, CA 94720-7360 FAX: 510-643-8614
Received on Fri May 8 18:04:56 1998