How can one determine the size and variation of flows on which the incomes of ordinary people depend on in a given territory?


First I think you would need to define your terms more specifically. Who are “ordinary people,” in terms of income and spending habits? What is a “given territory,” in a macroeconomic context? Also, what is the timespan involved? The “size and variation of flows” for any combination of sectors is going to be informed by these descriptors.

Even with specific definitions, this is an especially complicated and dynamic calculation. Let’s say you could account for every sector…when you then attempt constrain those sectors to a given geographical region, the data gets a bit slippery. For example, intersecting financial capital flows with that income data, how can we arrive at a regional representation when the actual assets and exchanges could be anywhere? Imagine, for example, a person who works for a transnational corporation and receives matching 401K contributions as part of their “salary,” and where those contributions, in turn, are invested in a REIT with widely distributed assets. How would all the flows involved (the international employer’s assets, diverse investment portfolio assets, tax-deferred income, etc.) be holistically represented? And how would all of the income velocity and transactional velocity in play over time be captured for any given increment? It could be done, but not without higher quality data than is currently available methinks. Of course, such data could be approximated in order to estimate such flows…but how accurate would it be? Hence the tough nut. Then again, if you restrict this type of speculation mainly to more generalized, large-scale macroeconomic models that are both homogenous and span large periods of time, you could come up with some useful insights. At least…that seems to be the domain where economists get it right more often than not. :-)

My 2 cents.

From Quora post: https://www.quora.com/How-can-one-determine-the-size-and-variation-of-flows-on-which-the-incomes-of-ordinary-people-depend-on-in-a-given-territory/answer/T-Collins-Logan

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