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The Aggregation Problem: Implications for Ecological and Biophysical Economics

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  • Fix, Blair

Abstract

This article discusses the aggregation problem and its implications for ecological economics. The aggregation problem consists of a simple dilemma: when adding heterogeneous phenomena together, the observer must choose the unit of analysis. The dilemma is that this choice affects the resulting measurement. This means that aggregate measurements are dependent on one's goals, and on the underlying theory. Using simple examples, this article shows how the aggregation problem complicates tasks such as calculating indexes of aggregate quantity, and how it undermines attempts to find a singular metric for complex issues such as sustainability. [Data and analysis for this paper are available at the Open Science Framework: https://osf.io/3smra/]

Suggested Citation

  • Fix, Blair, 2019. "The Aggregation Problem: Implications for Ecological and Biophysical Economics," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 1-15.
  • Handle: RePEc:zbw:espost:190951
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    File URL: https://www.econstor.eu/bitstream/10419/190951/1/20190100_fix_the_aggregation_problem_bpearq_preprint.pdf
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    References listed on IDEAS

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    1. W. David Eberle & F. Gregory Hayden, 1991. "Critique of Contingent Valuation and Travel Cost Methods for Valuing Natural Resources and Ecosystems," Journal of Economic Issues, Taylor & Francis Journals, vol. 25(3), pages 649-687, September.
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    Cited by:

    1. Fix, Blair & Nitzan, Jonathan & Bichler, Shimshon, 2019. "Real GDP: The Flawed Metric at the Heart of Macroeconomics," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 51-59.
    2. Blair Fix, 2019. "Dematerialization Through Services: Evaluating the Evidence," Biophysical Economics and Resource Quality, Springer, vol. 4(2), pages 1-17, June.
    3. Reiner Kümmel & Dietmar Lindenberger, 2020. "Energy in Growth Accounting and the Aggregation of Capital and Output," Biophysical Economics and Resource Quality, Springer, vol. 5(1), pages 1-10, March.

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    More about this item

    Keywords

    aggregation; capital stock; GDP; natural capital; sustainability indices;
    All these keywords.

    JEL classification:

    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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