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|Date: 2022-07-07 Page is: DBtxt001.php bk0003060|
The Basic Concepts of True Value Metrics
Numbers Help in Many Ways
Metrics about key items
Many different units of measure
Quantity metrics help to identify what is important and what is not. Numbers and the associated “unit of measure” make it very clear what is the scale of what is being reported. The media routinely included “numbers” in their reports, but the numbers rarely are presented in the clearest manner, but in ways that “support” the thesis of the article. TVM has a very different approach. Numbers are used to make the facts as clear as possible so that it is possible to ascertain with confidence how good decision making is and what results are being achieved.
How many? How big?
One of the most important questions is to do with people. How many people are there? With this number it is possible to calculate the “per capita” of any money or value metric, and with this have a way to do simple comparison with other places.
There are many measures that relate to people. Some are to do with quality of life … some are to do with the health of people … some the education and skill status.
Metrics about place?
Another important question is how big a place. A big number of people and a small place has a different dynamic than a small number of people and a big place.
What time? How long in time?
Whenever “state” is referred to, there is a need to know “At what time?”. State may change over time, so information about state without knowing what time is insufficient.
Progress is about change over time. The pace of progress is dependent on how long in time between one measurement of state and the next. Accordingly a balance sheet should always be associated with a date time stamp.
Data about an activity my be associated with the state in which case a date time stamp is needed or it may be associated with work being done in which case the time duration information is needed.
Lack of clarity about time is one of the ways in which information is distorted. Numbers are made to appear much bigger than they are by reporting numbers that refer to a very long period of time … and made to appear small by associating them with a short time period.
Far too often, important news stories are supported by images that are associated with an undisclosed time … perhaps giving an incorrect impression.
Where? How far in distance?
Data that are associated with a specific place are more valuable than data that are not. Different places have different characteristics … averages created from small samples and associated with big areas can rarely can be associated with anything real. A small amount of data about a specific place may be very informative.
“How far” is a useful fact in many situations. Knowing where is useful … but so also is knowing where in relation to some other place.
Indexes of how good or bad?
Numbers are useful to quantify many different items and facilitate comparison and how one situation relates to another.
Indexes of various sorts may be used. In TVM, a simple index may be used to identify progress. Simple indexes should be used with care. They may be used, for example, in the context of multiple baseline time series analysis of community performance.
Standard value and quality of life
The quantification of the elements that go to making up the quality of life is a critical factor in true value metrics meaning anything. This is not an easy process but it can be done.
TVM uses a system of standard values rather like the system of standard costs that are used in cost accounting. Everything that goes into making up quality of life is assigned a standard value … not a money value but an index that has a basis other than money. Something has a value of 1000 … everything else is valued relative to this element.
Everything is relative. The same element may be quantified differently in different places because of, for example, cultural differences. The same element may have a different quantification because of perceptions of value that change with age … or between ethnic groups, etc.
Business and economic metrics
Key item control
Most business activities have a quantity element as well as the money and financial measures. Keeping records about key items helps to manage large and complex organizations.
Performance of the economy
There are hundreds if not thousands of different quantitative economic indicators. These indicators have been incorporated into all sorts of economic models that are used for the analysis of the performance of the economy and the impact this performance will have on various money measures like corporate profit performance, stock market prices and GDP growth.
These various quantitative measures should also be associated with the value dimension of socio-economic performance.
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