This complements the theme of the “Golden Ratio” in economics - what is it?”, raised in . Let us approach the problem of preferential distribution of resources from an angle that has not yet been touched upon.
Let's take the simplest model of event generation: tossing a coin and the probability of getting heads or tails. It is postulated that:
Getting “heads” or “tails” on each individual throw is equally probable – 50 to 50%
With a large series of tosses, the number of occurrences of each side of the coin approaches the number of occurrences of the other.
This means that, by recording the results of previous heads and focusing on the balance of the series, we can expect the loss of heads (and the non-falling of tails) as the next element of the series with a greater or lesser probability, depending on the results of previous losses. Which is consistent with the experience of everyone who has conducted such a series.
As statistics show (to avoid repetition, see examples of graphs in ), in various economic systems - as in experiments with a coin - a certain regular-probabilistic distribution of expenses is observed. And it is extremely interesting to present this empirical distribution of expenses as a Lorenz diagram (see illustration below in “Company Expenses”). With some minor errors in its approximation, this curve turns into a circular arc (lower right quarter). An extensive statistical analysis of the distribution of resources indicates the high reproducibility of the arc of a circle in different areas of the economy (again, see the previous publication) And the degree of proximity of the existing distribution of expenses to this reference allows us to judge the “health” of the economic system under consideration. “Health” here refers to the survival of the system and its ability to develop.
Let's consider two segments of economic activity that are fundamentally similar, but each has certain specifics.
Company expenses
The Russian program Leonarus v.1.02 implements the approach stated above (see. ) evaluates spending from the point of view of the sustainability of the development of an economic entity as an integral system. It does this by assessing the distribution of costs and ensures the best use of available resources, warning against sharp deviations from the optimum of the system.
Spending that corresponds to this pattern ensures maximum freedom of the existing system and its maximum survivability.
The program is quite accessible to a user who is familiar with Excel and who has some experience in planning and business activities. The program allows you to assess the economic condition of the enterprise and make adjustments to the planned budget based on the current situation.
The relevance of assessing the current economic state is increasing today, as bankruptcy of legal entities is becoming increasingly common.
In 2017, over 9 thousand entrepreneurs ceased to exist. Small business bankruptcy statistics indicate that approximately 30% closed due to failure.
Business bankruptcy statistics also increased in 2017. More than 13,5 thousand companies went bankrupt in Russia. The increase was 7,7%. In the first quarter of 2018, 3,17 thousand enterprises were declared insolvent. The increase was 5%.
The Leonarus v.1.02 program is good because it allows you to adjust expected expenses, justifying a decrease/increase in expenses depending on the desired result: achieving the planned profitability. Enterprises that are close in cost structure to the preferred Lorenz diagram with an exponent of two have the highest profitability (Bueva, T. M. (2002). Application of modified Lorenz curves in fund allocation problems).
As a note: the program for its parcels could be very useful not only for businesses, but also for households. For example, when providing the house with provisions, several special delicacies are bought, simpler food for cooking, grains, seasonings, small household chemicals are collected in small quantities... The result is a picture that is highly likely to appear in most cases.
And if your spending is described by the preferred Lorenz diagram, then the life of your home is financially safe. Any expenses that fit into this chart—no matter how extravagant they may be—will not blow your budget.
The program could help even an experienced housewife if she needs to make drastic budget cuts. And in normal mode, it is needed to check already planned expenses. This is insurance that allows you to avoid gross mistakes and accidental lapses in attention when distributing money.
At the same time, alas, we have to admit that in its current form the program is a mock-up and is practically inaccessible to inexperienced users. A useful tool for home use has not yet been adapted... Any advice and suggestions for “landing” Leonarus v.1.02 are welcome.
Investment project analysis
This is a case of expert assessment, when it is not about changing costs, but about clarifying the risks of the project. This is done when, in addition to the already used methods for assessing the proposed investment, the cost structure is analyzed for proximity to the reference Lorenz diagram.
The available experience is insufficient to make definitive conclusions on this matter. However, based on theoretical premises and experience of the site , we can assume that the stronger the deviation of project costs from the reference arc to the left, the greater the danger of unforeseen developments due to some initial “looseness” of plans. And the greater the deviation to the right, the more likely it is that the planner/project manager tends to be over-regulated and the project does not have sufficient adaptive capacity to meet the challenges it will face.
These assumptions are refined by considering average project costs using the equations of quantum mechanics. But even without additional calculations, deviations from the reference chart can affect an informed investment decision. Either the project will be rejected due to the increased risk, or the deal structure must take into account the increased risk of the project.
In conclusion
The simplest economic system is actually a system with high uncertainty due to the diversity of its components and the variable relationships between them. The structure of proposed or current spending is not the only critical component of the system. However, it is one of those that can be adjusted by managers. And despite all the differences in the conditions in which economic activity takes place, we can assume that the optimal (from the point of view of the survival and development of an economic entity) distribution of resources is described by the reference Lorenz diagram. It may well be called the “golden ratio” in economics and can be extremely useful in economic planning and analysis.
“I have always found that when preparing for battle, plans are useless, but planning is priceless.”
D. Eisenhower, commander of the Allied forces in Europe (1944-1945)
To complete the picture:
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Source: habr.com