REPLY Meaning of Stock/Level (SD6896)

[SDMAIL wakeland]

Posted by  wakeland at pdx.edu

Regarding the post by Alan McLucas regarding qualitative stock variables 
that begins "There appears to be an increasing trend for some authors to 
proffer
models having "stocks" containing soft variables or intangibles as being
legitimate for their research..."

I think I appreciate Alan's concern, but nevertheless I believe strongly 
that it is appropriate to model qualitative variables as stocks in some 
cases.

Stocks are those variables we model by specifying the variable's rate of 
change (inflows minus outflows) rather than specifying a formula for the 
variable itself.

There are many examples.  Consider a variable that we might name 
"Current Degree of Awareness."  This is intangible, and yet it has 
persistence or memory.  Its value today is similar to its value 
yesterday, plus an amount related to the rate at which new sensory 
stimuli are tending to increase our awareness minus the rate at which 
awareness tends to atrophy or dim over time (probably specified via a 
time constant called something like "awareness half life").  Performance 
"level" for a given sport or game is often modeled this way.  
Performance improves with practice and atrophies without practice, but 
at any given time, current performance level is strongly related prior 
performance, so it is natural to model such a variable as a stock.

Wayne Wakeland,
Associate Professor
Systems Science Graduate Program
Portland State University
Posted by  wakeland at pdx.edu
posting date  Wed, 09 Apr 2008 22:35:22 -0700