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Thread: I need help with my theory/formula.

  1. #1

    Default I need help with my theory/formula.

    I am developing a new formula to determine a City's Economic Sustainability, or what I call a CESS Score, see below:

    W= City proper population % growth rate over last 5 years.
    X= Metro area population % growth rate over last 5 years.
    Y= City proper average unemployment % rate over last 5 years.
    Z= Metro area average unemployment % rate over last 5 years.

    W^2 - X^2/ Y^2 - Z^2 x .25 = City Economic Sustainability Score or CESS Score. The score I came up for Oklahoma City was .748, which means Oklahoma City has a 74.8% chance of sustaining is current economic growth for the next 5 years.

    However, I don't know if I have a good base indicator, please advise. I want to have this formula published, thank you.

  2. #2

    Default Re: I need help with my theory/formula.

    Well, unless I've missed something you haven't really shown any reason to think this is reliable. You'd need studies that went back for decades, showing the CESS rating of hundreds of cities, and then look at those to see whether it was correct or not. I don't see any reason to think this formula is accurate. I'm struggling to see why you picked those numbers. I mean, our unemployment numbers seem much more closely tied to oil prices and sustained federal dollars at Tinker than they do our population growth rate.

    Let's say, for example, that Example City had 100,000 people in it in 2008. Over the last 5 years they have experienced a 5% growth rate due to some crazy internet guy moving the headquarters of his company, FaceSpace, to the city. This gives us 127,628 people. But the metro area has grown by the exact same percent. In the case of Example City, the metro area is the city. You've got highly developed city surrounded by empty fields. As a result, your population increase number is a zero. 5% squared minus 5 percent squared = zero. You use this as your numerator, which means that any result you get is going to be zero. According to your formula, Example City has a 0% chance of sustaining its current economic growth over the next 5 years, regardless of what the crazy internet guy does. Now, had there been a small community around Example City (we'll call it Example Town), and it didn't grow at all, your city would have a higher chance of sustaining development. It doesn't matter that Example Town only has 10,000 people in it, and they all live in historic homes, and new construction is not allowed, the presence of Example Town and its abnormally low growth rate changes the equation tremendously.

    Sorry, but I really don't see where you got these numbers or that it's even close to accurate.

  3. #3

    Default Re: I need help with my theory/formula.

    I am in the process of developing it, I never said it was accurate, of course I need to plug this formula in and do case studies with several cities. Hence the reason for the thread, , where is JTF and Spartan when you need them?

  4. #4
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    Default Re: I need help with my theory/formula.

    What is the application of this rating? Is it being created for an entity or for curiosity.

    This would seemingly be a way too simple formula for actually predicting Economic sustainability. There are many, many factors. And, what is your definition of sustainability? Growth, financial solvency, citizen satisfaction levels, GDP, etc.?

  5. #5

    Default Re: I need help with my theory/formula.

    Just off the top of my head, I would look at:

    1) Financial stability of the top employers over the past 10 years (as well as stability of commodities prices for anything the local area produces)
    2) Population growth rate of the area (breaking it down into city vs metro area is probably deceiving due to the differences in how that is figured in each city)
    3) Immigration trends for the region. Are there a lot of people moving to that part of the country?
    4) Account for historic boom/bust cycles in certain areas if they are a top economic producer for the city (i.e, oil busts, banking busts, housing market busts)
    5) Education funding, both primary and secondary, as well as retention rate of college graduates. This tells you how likely people are to stay.

    I think unemployment rates just indicate how we are doing, and are not necessarily an indicator of how we will be doing.

    OKC is going to continue to grow as long as oil stays strong. If prices stay high for the next 20 years, our growth will accelerate and we'll be a pretty freakin' big city with a very strong economy. On the other hand if someone invents a car that runs on happy thoughts and pixie dust we're in a world of hurt.

  6. #6

    Default Re: I need help with my theory/formula.

    Thank you, I will incorporate the metro area college graduate retention rate in my formula.

  7. Default Re: I need help with my theory/formula.

    If I understand it, you are calculating if the unemployment rate is staying consistent with population growth rate; as more people move to OKC is the City's economy able to expand to meet the increase in new potential employees - or are the new comers arrival causing the unemployment rates to increase (or at least not be as low as they otherwise would). One thing I would take out of your equation is the relationship between OKC and the metro area. Jobs and housing are regional issues so trying to do a formula that treats the two as separate entities will be hard and inconsistent over time. Lots of people who work in OKC don't live in OKC.

    On the other hand, I have seen studies (many presented on the pages of OKCTalk) that use far less rational stats than what you are using and they get taken for gospel. I say screw it and just put a list out there with whatever calculation you want, run it up the flag pole, and see who salutes. You can even do what the "Best Places to Live" people do and that is charge cities to get on the list. Want to be at the top of the CESS list? $10,000 can make that happen.

  8. #8

    Default Re: I need help with my theory/formula.

    Quote Originally Posted by Just the facts View Post
    If I understand it, you are calculating if the unemployment rate is staying consistent with population growth rate; as more people move to OKC is the City's economy able to expand to meet the increase in new potential employees - or are the new comers arrival causing the unemployment rates to increase (or at least not be as low as they otherwise would). One thing I would take out of your equation is the relationship between OKC and the metro area. Jobs and housing are regional issues so trying to do a formula that treats the two as separate entities will be hard and inconsistent over time. Lots of people who work in OKC don't live in OKC.

    On the other hand, I have seen studies (many presented on the pages of OKCTalk) that use far less rational stats than what you are using and they get taken for gospel. I say screw it and just put a list out there with whatever calculation you want, run it up the flag pole, and see who salutes. You can even do what the "Best Places to Live" people do and that is charge cities to get on the list. Want to be at the top of the CESS list? $10,000 can make that happen.
    Yes, you are correct, that is the question, is the City's economy able to expand to meet the increase? But people whole live outlying areas can drive that demand of OKC proper, so I am having a hard time with that part, taking out the equation with the relationship between OKC and metro area. It seems they go hand in hand, there are many people who live in suburbs, but work in OKC, vice-versa, then we could also take into account daytime population OKC, which dramatically increases.

  9. Default Re: I need help with my theory/formula.

    So just use metro population and unemployment figures to compare the nations metro areas.

  10. #10

    Default Re: I need help with my theory/formula.

    I trust in SPSS, so I'd have a really hard time taking any two variables and attributing some effect to them. Do you have any experience with multivariate regression analysis?

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