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Respond to the question: Economic theory of aggregation?

02/21/2001 10:13 AM by Rodrigo; Aggregation

Hi, Sara. In Economic theory, the problem of aggregation arises when we want to combine all micro-variables into a single macro-variable. For example, if we have a collection of individual demand functions, is it possible to somehow add them up in order to get an aggregate demand function? You can find introductory discussion about this problem in any textbook on macroeconomics. Textbooks on econometrics also have some discussions. The problem is, sometimes the aggregate variable does not have the same nice properties as the individual variables. Another area where aggregation is an issue is social choice. When individuals have preferences over a set of alternatives, usually they can make a choice, that is, they can choose the best individual alternative. However, when we try to aggregate their preferences into a single collective preference, it is not possible to preserve some important properties the individual preferences have. You can find some discussion on the problem of social choice in some textbooks on microeconomics, e.g., chapter 5 of "A Course in Microecnomic Theory" by David Kreps. [Manage messages]

02/20/2001 09:05 AM by Brandn; Aggregation

The problem of macroeconomics is exacerbated by the need to aggregate. eg how much is 1kg of wheat and 1 litre of coke? In the context of positive vs normative economics, we sometimes come across problems identifying the variables [View full text and thread]

02/19/2001 05:23 PM by sara; Economic theory of aggregation

I would like to know what this theory is and how it is used [View full text and thread]