Doug, I bought your book, read it and bought another copy for my dad for xmas.
Travis
----- Original Message ----- From: "Doug Henwood" <dhenwood at panix.com> To: <lbo-talk at lbo-talk.org> Sent: Saturday, February 07, 2004 5:32 PM Subject: Re: [lbo-talk] hedonic pricing update
> T Fast wrote:
>
> >The neoclassical's violate their own marginal productivity theory every
time
> >they calculate the productivity of machines from the price of those
> >machines. Hedonic pricing makes an even bigger mess of the whole
problem.
> >In the neoclassical marginal productivity theory the price of capital
must
> >be derived from its productivity not vice-a -versa. So simply
calculating
> >productivity by multiplying a nominal figure by some imputed coefficient
> >derived from a guess about the relationship between processing power and
> >efficiency seems like a boondoggle to me.
>
> Have you read any of the "productivity revolution" papers (e.g.
> Jorgenson & Stiroh)? What an amazing pile of assumptions on top of
> imputations on top of estimates. It all relies on a growth accounting
> framework, which requires the assumption that rates of return on
> investment are equal throughout the economy, and can be observed with
> some precision. Since real investment in computers increased in the
> U.S. in the late 1990s, and since we "know" what the economy-wide
> rate of return is, we can conclude what the contribution of computer
> investment is to overall growth. Change an assumption or two and it
> all falls apart. It strikes me as delusional - the stuff that gets
> Ted Winslow going. I go into all this at some length in my book.
>
> >It seems to me that it is better to simply stick with nominal values
> >discounted for inflation.
>
> But what's inflation? The economy-wide rate of inflation is the sum
> of specific sectoral and commodity rates of inflation, and if you're
> going to compute those, you've got to get into the quality issue
> somehow. I don't think the hedonic technique is flawed at the
> conceptual level, but the execution leaves lots to be desired (for
> some of the reasons you mention in your GIS example).
>
> Doug
>
>
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