Introduction MELF Equation Macro Metrics Micro Metrics Beyond GDP How To Access Acknowledgements About Us
New Economics
Business Innovation Economics
From data collected for the period 1951-2001 and dubbed DINTEC™ (an acronym for Data on INnovation TEchnology and EConomics) a new and previously unknown equation called the Macroscopic Economic Lens Formula, or MELF (whose name is explained later) has been discovered. It incorporates new variables and works like this. Purchasers will pay more for higher performing products and services (described in Economics as having higher quality Q), while favoring a lower price option offered due to competition C. In symbols Q = G (P, C). Where G represents an exact algebra discovered when modeling creative destruction in commercial instances from data supplied by DINTEC™ without resorting to regression. For the first time, the cardinal quality of any product or service can be back- calculated from its real price. Even though real prices are affected by unaccounted quality improvement the new method appears to separate it out. This provides new insights, including a resolution of the 'price of light' dilemma and associated quality change problems across the economic spectrum. In addition the MELF can provide a convincing algebraic link from quality to GDP (by relating a sum of prices Sum:P to a sum of qualities Sum:Q) leading to an unprecedented 100% determination of economic growth that is dominated by Quality change considerations. In contrast and to force-fit labor and capital to GDP, current macroeconomics generates a residual called Total Factor Productivity, TFP, which is interpreted as a proxy for the impact of innovation on growth. But the MELF provides an exact fit. There is no residual. This breakthrough delivers a completely new and commanding role for innovation in growth accounting.
<Previous - Next>
Introduction to New Knowledge on the Direct Economic Measurement of Innovation HERE Read Q&A from an interview conducted by the Royal Economic Society HERE
MELF Equation