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Old 7th August 2020, 05:58 AM   #41
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Originally Posted by Matthew Ellard View Post
You can test the speed of light for its sole empirical data. You cannot test the entire economy for one economic ratio, suggested by a sample, or for one narrow economic formula, for example all alternative substitutions as price rises.
Well, my understanding is that the speed of light depends on the transmission medium by a small amount (and if someone who knows more physics than I do--almost everyone here--wants to correct this, please do.)

Is the point that empirical relations in economics are sometimes harder to figure out than empirical relations in physics, for example?
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Old 7th August 2020, 06:09 PM   #42
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Originally Posted by Startz View Post
Is the point that empirical relations in economics are sometimes harder to figure out than empirical relations in physics, for example?
You are only testing and measuring one factor with regards to the speed of light.

In economics you are making a hypothesis based on a sample (econometrics) that does not actually show you what all the variables could be. If I increase the price of bananas and households substitute something else for bananas, I don't know if that is apples, oranges, kiwifruit, blueberries or the household simply stopped buying fruit. I would have to count all the alternatives, rather than simply ask a demand curve question about bananas.

I think that physics has basic fixed rules which narrows the alternatives to combinations, whereas economics is both evolving and has no fixed combination rules.


I now have to be more careful because, as physics and economics are very different fields, common words have very different meanings in the different fields. "elasticity" is a good example.

(I'm a semi retired entertainment tax lawyer with an economics background)
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Old 7th August 2020, 07:24 PM   #43
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Originally Posted by Matthew Ellard View Post
You are only testing and measuring one factor with regards to the speed of light.

In economics you are making a hypothesis based on a sample (econometrics) that does not actually show you what all the variables could be. If I increase the price of bananas and households substitute something else for bananas, I don't know if that is apples, oranges, kiwifruit, blueberries or the household simply stopped buying fruit. I would have to count all the alternatives, rather than simply ask a demand curve question about bananas.

I think that physics has basic fixed rules which narrows the alternatives to combinations, whereas economics is both evolving and has no fixed combination rules.


I now have to be more careful because, as physics and economics are very different fields, common words have very different meanings in the different fields. "elasticity" is a good example.

(I'm a semi retired entertainment tax lawyer with an economics background)
I might quibble over some of this, but I agree with your general thrust. Still not quite sure what all this suggests. if it's just for general educational purposes, that seems like a good thing.
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Old 7th August 2020, 08:02 PM   #44
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Well, once I saw a civilization reduced to employees and employers, I thought we were heading towards a Marxist philosophy of theft of labor and undoing the accumulation of wealth in the hands of owners. But this is not where this went. I have no idea where it did go, however.
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Old 7th August 2020, 09:38 PM   #45
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I once threw a condom filled with stale lasagna at my neighbors backyard barbeque who were blasting country music. But that was not where it went. I have no idea where it did go, either.
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Old 7th August 2020, 11:12 PM   #46
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Originally Posted by Startz View Post
I might quibble over some of this, but I agree with your general thrust. Still not quite sure what all this suggests. if it's just for general educational purposes, that seems like a good thing.
It's hard because I'm trying to combine auditing logic and economics logic. In essence, if you really want to know what happened you measure every individual transaction again. However that would be prohibitively expensive and you would have to freeze all transactions while you were measuring to determine the volume in a period. Therefore all you can do is apply models and introduce assumptions based on other sample inputs.

Auditing is basically a variant of risk management. Economic and financial ratios are a variety of derived formulas that can be applied in sets that should come up with similar ratios to other scenarios. If the similarities don't appear, then there is inherent risk and the auditor or economist must look deeper.

(Generally it is very boring work but if you can't show you followed all the recommended steps, you will get sued by someone. That's why no one wants to become an auditor )
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Old 8th August 2020, 06:11 AM   #47
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Originally Posted by Matthew Ellard View Post
It's hard because I'm trying to combine auditing logic and economics logic. In essence, if you really want to know what happened you measure every individual transaction again. However that would be prohibitively expensive and you would have to freeze all transactions while you were measuring to determine the volume in a period. Therefore all you can do is apply models and introduce assumptions based on other sample inputs.
Do you happen to have an example where (a) some statistical test is used to conduct an audit and (b) where the data is shareable? I've been looking for one of those for years.
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Old 8th August 2020, 08:44 PM   #48
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Originally Posted by Startz View Post
Do you happen to have an example where (a) some statistical test is used to conduct an audit and (b) where the data is shareable? I've been looking for one of those for years.
https://corporatefinanceinstitute.co...ancial-ratios/

The use of ratios and comparisons in auditing
https://opentuition.com/acca/aa/use-...sons-auditing/
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Old Yesterday, 06:09 AM   #49
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I appreciate the links, but I didn't see any obvious downloadable data. I probably should have been more clear. I'm looking for downloadable data that can be used in a regression.
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Old Yesterday, 08:40 AM   #50
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Originally Posted by Startz View Post
I appreciate the links, but I didn't see any obvious downloadable data. I probably should have been more clear. I'm looking for downloadable data that can be used in a regression.
I don't quite understand what you are looking for but, if it's tables of data you can down load, there are a few thousand for Canada at least at https://www150.statcan.gc.ca/n1/en/type/data

Regress away.
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Old Yesterday, 08:48 AM   #51
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Thanks Gord.

I usually (but not this fall) teach an introductory econometrics course. About half the students are studying accounting. I'd like to be able to show examples in which regression is used in accounting or auditing to help motivate the material. Getting economic data is easy. Getting accounting data is hard, as most of it's proprietary.
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Old Yesterday, 04:35 PM   #52
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Originally Posted by Startz View Post
I appreciate the links, but I didn't see any obvious downloadable data. I probably should have been more clear. I'm looking for downloadable data that can be used in a regression.
Good point. I guess I need to clarify that matching comparative ratios to investigate if inherent risk exists, generally only applies to similar industries. If a mid sized furniture retail outlet turns over stock twenty times a year and has roughly 5% of the P&L annual cost of goods, sitting in the balance sheet, then similar furniture retail firms should show similar comparatives.

The main user of this logic is the Australian Tax Office (ATO). In Australia we lodge our returns through self assessment. We have to supply simplified financial statements and an industry code. The ATO uses computers to compare all similar industries together and those with the greatest variance from the norm are audited by the ATO.

The funny thing is that these specific industry comparative ratios are incredibly secret. If they weren't, naughty tax agents would massage actual financial statements to look normal ratios and thus avoid ATO audits.

I used to promote tax scams before being caught. When inflation was 17% there were ways of investing in Australian content movies (10BA) and receiving 120% tax deduction. The movie's producers would pay the tax payer back after the taxpayer had retired and thus received even more tax concessions. Mad Max and Crocodile Dundee were both 10BA tax films. The Aussie company Beyond that produced "Mythbusters" was originally a tax accounting practice that made 10BA films. I started there in the late 80's.
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