III. STOCKS VS. FLOWS
In the sciences, measurement is important
and in this respect, economics and the other social sciences do
not differ from the physical and biological sciences. One
important way to categorize the types of variables, the things
we measure, dealt with in any of the sciences is whether the measure
taken is or is not relative to time. Variables that are
not time relative are called stock variables, while those that
are time relative are called flow variables. The amount
of blood in your body at a given instance is a stock variable,
it is measured in liters or quartstime (such as decades,
years, months, weeks, days, hours, minutes, or seconds) is not
mentioned at all. The amount of blood rushing past a particular
point in your body, such as your heart, would be measured in liters
or quarts per hour (or per minute or per second). This is
a flow variable.
Notice that stock measures may be in units of volume, distance, mass, area, etc., while flow measures are in units of volume/units of time, or units of distance/units of time, etc. The census just counted the number of people in Louisiana at a particular point in 1990this is a stock variable. The change in the population of Louisiana over 1980's census count is a flow variablepeople per decade.
Other stock variables one might be interested
in would be the number of troops in Saudi Arabia, the amount of
oil in the Gulf of Mexico, the number of breedingage redfish,
the number of students in a class, the number of dollars in a
bank account, the number of crack addicts in a city, or the number
of square miles of land in Louisiana. Related flow measures
might be the number of troops arriving in Saudi Arabia per day,
the amount of oil extracted from the Gulf of Mexico per day, the
increase (or decrease) in the number of breeding redfish per year,
the number of students dropping out of a class in a semester,
the dollars withdrawn from a bank account per week, the increase
(or decrease) in the number of crack addicts in a city per year,
or the square miles of Louisiana lost to coastal erosion per year,
respectively. Another example comes from accounting:
balance sheets are accounting statements (summaries) of the assets
(dollar value of things owned) by a firm or individual and the
liabilities (dollar value of things owed) by that firm or individual,
while a income statement shows the dollar amount of sales in a
year (or other time period) along with the dollar amount of expenses
incurred in a year (or in the same time period as sales) to make
those sales dollars.
PREVIOUS PAGE HOME NEXT PAGE