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Use of statistical decision theory in regional planning

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References

  1. See, among others; Russell L. Ackoff, ed.,Progress in Operations Research, Vol. 1, John Wiley, New York, 1961; William J. Baumol,Economic Theory and Operations Analysis, Prentice-Hall, Englewood Cliffs, N. J., 1961; Richard Bellman,Dynamic Programming, Princeton University Press, Princeton, N. J., 1957; Herman Chernoff and Lincoln E. Moses,Elementary Decision Theory, John Wiley, New York, 1959; and Robert Schlaifer,Introduction to Statistics for Business Decisions, McGraw-Hill, New York, 1961. For a review of literature relating some of these to planning, see: J. W. Dyckman, “Planning and Decision Theory”,Journal of the American Institute of Planners, Vol. XXVII, No. 4, November 1961, pp. 335–345.

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  2. W. Isard and M. Dacey, “On the Projection of Behavior in Regional Analysis,”Journal of Regional Science, Vol. IV, No. 1, 1962 (forthcoming).

  3. On the national level, no necessary relation is assumed between the military expenditure programs and the renewal activities. For a description of the political milieu in which urban renewal decisions are made in the United States, see: Edward C. Banfield,Political Influence, Free Press of Glencoe, New York, 1961; Robert A. Dahl,Who Governs? Democracy and Power in an American City, Yale University Press, New Haven, 1961; Martin Meyerson, Barbara Terrett, and William L. C. Wheaton,Housing, People, and Cities, McGraw-Hill, New York, 1962: John W. Dyckman and Reginald R. Isaacs,Capital Requirements for Urban Development and Renewal, McGraw-Hill, New York, 1961; Peter H. Rossi and Robert A. Dentler,The Politics of Urban Renewal, Free Press of Glencoe, New York, 1961; and P. Ylvisaker, “Diversity and the Public Interest; Two Cases in Metropolitan Decision-Making,”Journal of the American Institute of Planners, Vol. XXVII, No. 2, May 1961, pp. 107–117.

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  4. Let us assume that the mayor does not take into account other states of the environment, such as (1) a severe deflation resulting from internal repayment of the national debt coupled with a high rate of personal savings and (2) a catastrophe resulting from a nuclear war.

  5. We will not ask here how these numbers are derived. This question, as well as questions regarding the number of action-alternatives (rows) and environmental states (columns), is treated in Isard and Daceyop. cit. W. Isard and M. Dacey,“On the Projection of Behavior in Regional Analysis”,Journal of Regional Science, Vol. IV, No. 1, 1962 (forthcoming).

  6. Expected votes may be computed as follows:

  7. See, for example: J. W. Angell, “Uncertainty, Likelihoods and Investment Decisions,”Quarterly Journal of Economics, Vol. 74, No. 1, February 1960, pp. 1–28; Baumol,op. cit,William J. Baumol,Economic Theory and Operations Analysis, Prentice-Hall, Englewood Cliffs, N. J., 1961; chs. 17–19; Isard and Dacey.op cit:William J. Baumol,Economic Theory and Operations Analysis, Prentice-Hall, Englewood Cliffs, N. J., 1961; John Milnor, “Games Against Nature,” in R. M. Thrall, C. H. Coombs, and R. L. Davis, eds.,Decision Processes, John Wiley, New York, 1954; G.L.S. Shackle,Uncertainty in Economics and other Reflections, Cambridge University Press, Cambridge, 1949; and M. Shubik, “Objective Functions and Models of Corporate Optimization”,Quarterly Journal of Economics, Vol. 75, No. 3, August 1961, pp. 345–375.

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  8. Many other subtle refinements to this way of thinking are, of course, possible. Unfortunately, we do not have the time to consider them in this paper.

  9. In order to simplify our problem, we assume that this figure is independent of the state of the environment. In the real world, of course, voter participation and thus the number needed to win will vary with the state of the environment.

  10. Herbert A. Simon,Models of Man, John Wiley, New York, 1957, ch. 14. Of course, this kind of approach may suggest a greater amount of sophistication than is usually associated with the so-called sophisticated analyst. It may reflect a brilliant recognition of the fact that no social scientist is able to encompass in his analysis anything but a small fraction of the variables at play, and even then must employ extremely crude techniques of measurement.

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  11. For another highly simplified case which is of some interest, see: W. Isard and T. A. Reiner, “Aspects of Decision-Making Theory and Regional Science,”Papers and Proceedings of the Regional Science Association, Vol. IX, 1962.

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Authors
  1. Walter Isard
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  2. Thomas A. Reiner
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Additional information

The authors are associated with the Department of Regional Science, Wharton School, University of Pennsylvania, and the Regional Science Research Institute, U.S.A. They are indebted to the National Science Foundation and Resources for the Future, Inc., for grants in support of the research underlying this paper.

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Isard, W., Reiner, T.A. Use of statistical decision theory in regional planning. Papers of the Regional Science Association 10, 1–7 (1963). https://doi.org/10.1007/BF01934674

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