Introduction MELF Equation Macro Metrics Micro Metrics Beyond GDP How To Access Acknowledgements About Us
Determines Economic Performance Anew
Business Innovation Economics
The Sears catalog’s last edition, published in 1993 priced a vast array of useful and attractive items not available or even imagined in the first edition a hundred years before. Every thing we buy today does a better job, or defines a better job, than it did in the past. Because what we make, makes us – and has done for more than a million years - what the products of new technology do for our quality of life is more important than their prices, Yet, according to business thinker Peter F. Drucker, ‘ .. every economics book points out that customers buy what the product does for them. And then, every economics book promptly drops consideration of everything except the price for the product. What the product does for the customer is never mentioned again ..’ But Drucker overlooked the reason it’s never mentioned again. That’s because of an economics equation, which only works in one direction. It takes the kind of saleable attributes found in catalogs and prices them, but it cannot take those prices and go back to attributes, to what the product does for us. If this equation – it’s called the hedonic equation – could be reversed then the standard of living we derive from everyday objects becomes calculable, with profound consequences for all economic thinking, as the next pages will show ...