Re: nat'l accounting...

[Harry Veeder <aa361@xxxxxxxxxxxxxxx>]

On Mon, 15 Sep 1997, Bruce R. McFarling wrote:

> On Fri, 29 Aug 1997 15:44:52 +0200, "Per Gunnar Berglund"
><pgb@xxxxxxxxxxxxxxxxxx> wrote:
> <snip>
> >...
> >    Let me finally add that the notion of volume measurement does indeed
> >follow from "neoclassical" or "microeconomic" (or whatever) notions, namely
> >the notions of constrained utility maximisation (and/or effort
> >minimisation).
> >    The mere mathematical method employed, the Lagrange multiplier method of
> >constrained optimisation that is, directly yields some powerful insights
> >about the intra-personal part of the matter:
> >    (a) the individual will spend his income on different goods in
> >proportion to their relative contribution to the utility of that
> >individual;
> >    (b) the individual will spend his efforts on different occupations in
> >proportion to their relative contribution to the work income of that
> >individual.
>
> 	Constrained utility maximising is not a 'mere mathematical
> method'.  It is a scientific, verifiable model of certain physical
> phenomena that was developed in the 1800's, and borrowed in the late
> 1800's by the founders of neoclassical economics.

I'm just curious, do you happen to know what physical phenomena was being
studied.

> The analogy that
> was drawn between human behavior and the physical phenomena that the
> model actually applies to turned out to be a false analogy.

I don't think it is valid to claim that a particular analogy is false. It
can be argued that particular analogy is poor or misleading or
inappropriate. Also, the valid application of mathematical tools is not
dependent on analogous arguments. It depends on positing a set of real
real variables (observables) and identifying them with mathematical
variables.

Harry Veeder