tag:blogger.com,1999:blog-5687347459208158501.post952525409578299853..comments2024-03-29T03:19:09.227-04:00Comments on The Philosopher's Stone: A REPLY TO WALLYVERRobert Paul Wolffhttp://www.blogger.com/profile/11970360952872431856noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-5687347459208158501.post-62139521119779342012011-02-22T05:06:31.412-05:002011-02-22T05:06:31.412-05:00I think there is a useful distinction between your...I think there is a useful distinction between your argument for the inevitable ideological background to social analysis and my point about index numbers. Your unemployment blog some months ago about the Waltons, the Galt(s), and the Marxes highlighted the social meaning attaching to the concept of unemployment, and the consequences of this for trying to measure unemployment. <br /><br />I was referring to a narrower issue of indeterminacy, where it is in principle impossible to identify a single number as correct. In standard examples of index number theory, Paasche and Laspeyres indices constitute bounds, typically lower and upper respectively. If the bounds are narrow, then this indeterminacy may not matter much. For example, with adjacent years of a time series, the Paasche and Laspeyres typically differ by less than 1%. For cross-sections, such as firms in the same industry but different regions, the two can differ by 50%. (This comes from one of Erwin Diewert's survey articles.) Economists worry less than accountants about small numerical discrepancies; I could live with 1%, but a 50% divergence would be troublesome. <br /><br />Not having read Thomas on accounting, I'm not sure which of these two interpretations would more appropriate for him. But for index numbers, let me give another example. There has been quite a bit of research work done on "democratic" and "plutocratic" consumer price indices. Standard officially-published CPIs are typically plutocratic, i.e. richer households have higher weights because they spend more. "Democratic" indices weight sample households equally. The choice between these two indices isn't indeterminacy in my sense, but rather a political one in your sense. Though my indeterminacy point would also apply to each of the democratic or plutocratic indices.wallyverrhttps://www.blogger.com/profile/18358344785499490511noreply@blogger.com