Wednesday, December 03, 2008

Real World Leontief Production Function

Here is Kevin Carey arguing for universities to make labor more productive with technology. This reminds me of an experiment I tried earlier this semester.

I have two desks in my office, but only one computer. I set up my laptop for permanent residence on the second desk, thinking it might create opportunities for more scholarly output. Complicated regressions can take a few minutes at a time, and working on other programs while they run can slow the process. My thinking was I could start a regression, turn around to the other desk, and work on something else. However, the transition process from one computer to another, and the monitoring process (frequently turning around to see if it was finished) offset the productivity gains. If you think of scholarly output (q) as a production function of labor and computers F(L,C) then the following was true:

q = F(1,1) = F(1,2)

The only production function* that comes to mind is the Leontief function, which is

q = min{input 1, input 2}

Finally, a real-world situation in which this function applies. Input-Output modelers, feel free to leave your hate mail for that statement in the comments ;).

* For students, we do have utility functions that might apply the Leontief function. You can think consumers are probably indifferent between a box containing 1 left shoe, 1 right shoe, and another box containing 1 left shoe but 2 right shoes.


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