[OPE] Dimensional analysis of price-value correspondence: a spurious case of spurious correlation

From: Alejandro Valle Baeza <valle@servidor.unam.mx>
Date: Sun Oct 17 2010 - 08:35:09 EDT

"No agreement has been reached as to what labor theory of value is
(Foley, 2000), Itoh, 1988; Kliman, 2006; Laibman, 1992 and Mohun, 2000).
Paradoxically there are empirical studies showing strong association
between labor values and market prices. Such works could inject new
energy into Marxist theory of value; nevertheless some critics have
questioned such empirical findings because: a) there is a problem of
spurious correlation involved, and b) measures of association vary with
changes in the physical units of the analyzed merchandises. We shall see
that in this discussion there is a difficulty stemming from the
definition of the problem as well as the question of the dimension of
the mathematical models used. My main conclusions state that critics are
wrong, and empirical studies are solid enough. These conclusions will be
supported by two reasons: a) the existence of a spurious correlation
does not apply to this problem according to the dimensional analysis, so
well known in natural sciences, but seldom applied in economical
problems; and b) dimensional analysis is essential to adequately pose
the price-value association problem and thus to obtain measures that do
not change with modifications of units of measurement."

This quote is from my forthcoming paper:
"Dimensional analysis of price-value correspondence: a spurious case of
spurious correlation" Investigacin econmica, vol. LXIX, 274,
octubre-diciembre de 2010, pp. -??

The paper will be published in English and I will send a copy to any
body interested on it

Alejandro Valle Baeza

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Received on Sun Oct 17 08:40:04 2010

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