On the proper use of ordinal variables in labor market models

Article Abstract:

The criticism made by Martin Currie and Ian Steedman against the use by some economic theorists of ordinal ideas as variables in economic models is discussed with emphasis on ways to correct the problem. One particular example of incorrect usage is the effort variable defined in labor market models. It is suggested that a positive monotonic transformation test be conducted to determine the appropriateness of a proposed ordinal variable and the validity of results.

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On the proper use of ordinal variables - a comment

Article Abstract:

Human capital theory uses human capital as an ordinal variable, though critics such as Derek Leslie argue that it should be used as a cardinal variable. Leslie argues that some models use ordinal variables improperly. He sets out a criterion for using ordinal variables, and human capital fits into his own criterion. One can criticise models of human capital but they should not be criticised for improperly using ordinal variables.

Usage, Economic aspects, Human capital, Variables (Mathematics)

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Further on ordinal variables in economic models

Article Abstract:

Derek Leslie's rule to determine the appropriateness of the use of particular ordinal variables in economic models is not valid especially in the context of the effort variable in labor market models. An ordinal variable, contrary to Leslie's assertion, is never appropriate in economic models and thus, the effort variable should not be incorporated and no tests for its validity are warranted.

Economics

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