Free Essay

Measurement Theory

In: Business and Management

Submitted By natasyadeen
Words 1075
Pages 5
2- Measurement Theory
Measurement is being defined by many researchers. According to Campbell it is the assignment of numerals to represent properties of material systems other than numbers. A similar definition was given by Stevens who states measurement as the assignment of numerals to objects or events according to rules. Whatever the definitions given by all the researchers, they all bring about to the same meaning and understanding. Based on my understanding, measurement is the process of observing, recording and calculating the observations that are collected as part of a research effort which is usually represented by units. These units possess values and are often numerical.
Everyone uses measurement without even noticing it sometimes. In studying measurement theory, I realised that measurement involve in many of our daily activities without us even noticing it sometimes. Some examples include measuring our heights and weights, measuring the nearest and shortest distance to get to class, measuring the time taken to complete an assignment and many more. Therefore, it can be said that measurement theory is definitely important and useful for everyone. Understanding the importance of measurement theory is crucial to address issues in business, accounting, social and economics.
Importance of measurement in Accounting
Why is measurement theory important? Well, it is important for three simple reasons. It is important to make decisions, assess performance and positions and make comparisons. Let’s look at accounting perspective first. In accounting, almost everything is being measured which includes expenses, revenues, assets, liabilities and profits. Accountants use measurements to report information to internal and external users via financial statements. Financial accounting measurements are typically recorded at historical cost or adjusted to current market values through adjusting entries. Measurement are also being used in management accounting uses to calculate the cost of materials used or the number of labor hours needed to produce goods or services by the method of cost allocation. Cost allocation drivers are the specific accounting measurements used by accountants to apply business costs. Accountants determine the best accounting measurement by reviewing each production procedure and breaking these processes down into allocation drivers. Apart from that, to set a selling price measurement needs to be taken in terms of calculating breakeven point to measure the required units to be sold in order to achieve targeted profit. It is easy to say that measuring is very important in accounting, as accountants, measurement is what they are being paid for.

Importance of measurement in Business
In business perspective, everything needs to be measurable in order to get a true picture of the business growth. It’s important to measure the business activities because variables will change and in order to analyse the results accurately, there should have an indication of why things have changed. Activities such as sales figures, online marketing, magazine advertisements, email campaigns, customer satisfaction and social media activity are some examples that require measurement. By measuring, only then the top management can make strategic decisions to further improve their business and achieve their business goals. Once measured, corrective measures or improvements can be carried out in order to keep satisfying the customers and fulfilling their needs. Also by measuring, company can review and make comparisons of their performance from previous years, from what they have forecasted, from the performance of their competitors and the industry. Let’s take a retail company for example; the weather can have a huge impact on retail sales. If the variables are measured accurately, they will be able to notice these changes and be able to create a plan to mitigate from this in the future. According to Realbusiness UK, advertising is very important to be measured to know if it is a successful advertising or not. Taking out a one-page advertisement in a broadsheet newspaper may seem like a good idea but what is the expected return? How many leads will the advertisement generate? How many sales will come as a result? Each question needs to be answered and the results measured or money will be simply pouring down the drain.
Importance of measurement in Economics
In my understanding, in the perspective of economics, measurement is not being discussed much, but from what I’ve read it is still important but being discussed general an unclear. However, a common discussion of measurement in economics would be the Gross Domestic Profit (GDP). GDP is one of the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period. In simple words, GDP represents the size of the economy. According to the article “GDP and Its Importance” written by Elvis Picardo, CFA, GDP enables policymakers and central banks to judge whether the economy is contracting or expanding, whether it needs a boost or restraint, and if a threat such as a recession or inflation looms on the horizon. The national income and product accounts (NIPA), which form the basis for measuring GDP, allow policymakers, economists and business to analyze the impact of such variables as monetary and fiscal policy, economic shocks such as a spike in oil price, as well as tax and spending plans, on the overall economy and on specific components of it.

Importance of measurement in Social
According to a psychologist Natalie Boyd, it is much easier to understand the importance of measurement in social studies by putting oneself as a psychologist. Let’s just say that as a psychologist, it has been found a new way to treat depressed people. So, the psychologist tried it on one of the patients, and after the treatment the patient is no longer depressed. Could the same way work for other patients? Could it work for any gender and age? In order to answer these questions, psychologist would carry out the same treatment to many different patients and measure the results. So why is it important? Measurement would give us an understanding of what is actually going on. It is a way to understand what's going on and how to communicate it to others so that they, too, will understand. In a social research, it is about comparing one thing to another. This could be comparing two groups, like doing a study to see if men are better at math problems than women, or it could be comparing changes over time, like our study on whether people given your treatment for depression become less depressed after the treatment.

Similar Documents

Free Essay

Is Accounting a Measurement Science

... Measurement in Accounting: What is the Scale? In the last few years the field of accounting has been the subject of a critical review,the intensity of which is increasing as time goes by. Somehow, both within and without the accounting profession, there is a feeling of dissatisfaction with the information generated by the accounting process. Such dissatisfaction is leading to questions about the fundamental bases of Accounting. The practitioner claims to identify,collect,measure,record,analyse and report financial data useful for a variety of purposes. Unfortunately, recent financial turmoil emanating from some of the uses applied to accounting reports is causing accountants and other stakeholders to question the foundations of accounting. Some ask questions like is Accounting a Science or Art? If it is a science, what is its foundation in Science? Are their theories guiding the focus of accounting scholars? Are these theories the result of empirical findings and observations? Are the findings the outcome of diligent and rigorous measurement of phenomena? Does accounting measure any phenomena? Is the accounting phenomena amenable to measurement? Inshort is Accounting a measurement Discipline? Scholars are therefore re-examining the foundations of accounting to determine its suitability as a Science. A Science Discipline is founded on theories which are prediction of phenomena. These predictions are possible because rigorous and precise measurements of phenomena is......

Words: 5315 - Pages: 22

Premium Essay


...Measurement and Measurement Error PHYS 1313 S06 Prof. T.E. Coan Version: 16 Jan ’06 Introduction Physics makes both general and detailed statements about the physical universe and these statements are organized in such a way that they provide a model or a kind of coherent picture about how and why the universe works the way it does. These sets of statements are called “theories” and are much more than a simple list of “facts and figures” like you might find in an almanac or a telephone book (even though almanacs and telephone books are quite useful). A good physics theory is far more interested in principles than simple “facts.” Noting that the moon appears regularly in the night sky is far less interesting than understanding why it does so. We have confidence that a particular physics theory is telling us something interesting about the physical universe because we are able to test quantitatively its predictions or statements about the universe. Indeed, all physics (and scientific) theories have this “put up or shut up” quality to them. For something to be called a physics “theory” in the first place, it must be falsifiable and therefore must make quantitative statements about the universe that can be then quantitatively tested. These tests are called “experiments.” The statement, “My girlfriend is the most charming woman in the world,” however true it may be, has no business being in a physics theory because it simply cannot be......

Words: 3271 - Pages: 14

Premium Essay

Hello Panda

...Equity Theory of Motivation As the cliche goes, no man is an island. Everything man does is influenced by other men and his environment. Be it in school or at work, the reason why people persevere lies on the desire to achieve a certain goal. Hence, motivation is essential to keep the drive of doing things passionately and effectively. However, the enthusiasm to sustain the dream and keep the motivation alive can be tampered by life’s uncertainties. Given the unique characteristics that each student possess, the amount of effort exerted by an average student does not always equal the amount of effort exerted by an outlier in class, yet the results are the same or sometimes exceeded by the outlier. Perhaps there are instances when studying overnight and not studying at all yielded the same result. These situations affect the level of motivation a student harness when studying. The feeling of unfairness affects how he/she will prepare for the next exam. In the workplace setting, motivation is likewise an important factor to increase productivity. For example, an employee who worked overtime to get the job well done vis-a-vis an employee who slacked off and produced a mediocre output both received the same salary and the same praises from their boss. The hardworking employee might feel wronged upon seeing how his extra effort was overlooked. To give justice to the unfairness he feels, he opts to mimic the other employee, thus also producing a mediocre output. The equity......

Words: 2543 - Pages: 11

Premium Essay

Accounting Regulation

...Three Theories of Regulation 1: Public interest theory The central economic rationale for origins of government intervention with public interest theory is that of market failure. Public interest theory assumes that economic markets are subject to a series of market imperfections or transaction failures, which if left uncorrected will result in both inefficient and inequitable outcomes. 2: Regulatory Capture Theory Capture theory assumes that all members of society are economically rational -and each will pursue his/her self interest to the point where marginal benefit from lobbying regulators just equals private marginal cost. Therefore people lobby for regulations that increase their wealth, or they lobby to ensure that regulations are ineffective in decreasing their wealth. 3: Private Interest Theory Stigler’s private interest theory – he argues that regulatory activity reflects the relative political power between interest groups. Interaction is with politicians who are not neutral arbiters but are like business executives or consumers - and are thus rationally self interested. Private interest theories favour producer groups as the most likely to become organised interest groups. Theorists believe that regulation does not arise as a result of a government‘s response to public demands – it is sought by the producer private interest group - and is designed and operated primarily for its benefit. QUESTION TWO –ACCOUNTING THEORY 12 * Normative......

Words: 1607 - Pages: 7

Free Essay

Bkaf 3083 Syllabus

...CODE : BKAF3083 COURSE : ACCOUNTING THEORY AND PRACTICE PRE-REQUISITE : BKAF3073 FINANCIAL ACCOUNTING AND REPORTING IV |Lecturer |Group |Room |Ext. |e-mail | |DR. DHIAA SHAMKI |C & F |3.07 |3740 | | 1.0 SYNOPSIS This course is an advanced level course focusing on financial accounting theory; and as such, it differs from other accounting courses learnt previously. It is designed to further enhance students’ understanding of the concepts and issues in accounting theory and practices. This course involves the study of the practical and theoretical issues involved in the development, implementation and changes in accounting theories and regulatory framework. As this course will be seminal-like, this course will provide students with some generic skills required in the accounting profession such as team working, interaction, leadership, follower-ship, critical and creative thinking skills, decision making skills, analytical skills, communication skills as well as professional demeanor. 2.0 OBJECTIVES Upon completion of this course, students are expected: 2.1 to understand the principles, concepts and issues in accounting theory, financial accounting theory and reporting practices, 2.2 to...

Words: 1874 - Pages: 8

Premium Essay

Self-Congurity and Brend

...Self-congruityand brand personality on consumer satisfaction Since the theory of consumer satisfaction put forward, it has been attracting marketing researchers attention and came out many valuable theoretical results. However, it is relatively less about the influence of self-congruity to consumer satisfaction (Sirgy et al., 1997). This review will focus on the literature on self-congruity theory including self-concept and brand personality, and the influence on consumer satisfaction. Expand the mainstream view and research result and conclude the limit of former studies. Most of the literature focus on the changing of self-congruity, brand personality and consumer satisfaction. At the end of the 19 century, there were already some research topics related to self-congruity within the domain in psychology. However, until the late of the 1950s, researchers started to introduce the topic of self-congruity into the researches of customers’ behaviors. Nowadays, there is already a complete model of theory and methods of measurement of the Self-Congruity Concept. There are many scholars believe self-congruity is how an individual think or feel on himself from an objective perspective. After all, there are still different explanation interpreted by many people. For example, the theory of psychology analysis believes self-congruity is a system for an individual to interface with conflict. The theory of recognition explains this as a conceptual system that processes......

Words: 3725 - Pages: 15

Premium Essay

Chemistry and Society

...and precision are used for measurements. The term accuracy means to have the exact value. The term precision means to be comprehensive and exact. The accuracy of a value is the measure of how closely the results agree with a true or accepted value.   Precision of a value is the measurement of the reliability of the experiment. The differences are within the definitions, it all depends on what you are looking for within the results of a test for the proper use of these two units of measurements.     Society depends on the accuracy and precision of measurements for products sold by the retail industry, such as a gallon of gasoline, a bushel of corn, or a liter of bottled water. These measurements have to be precise and accurate when it this relates to how farmers sell their products such as wheat, corn, milk, peanuts, and cotton, by weight and or in a bulk sale. Like food products gasoline, water, oil, and several other liquid goods are sold in quantity and if the measurements are not accurately sold per gallon then the United States government will not retain a profit from the barrel of gasoline, water, oil, and several other liquid goods that are purchased from other countries. I would have to say that this really is about supply and demand and the ability to generate a profit from the accuracy and precision of the weight and how much to sell an item for in most situations. Other ways society depends on the accuracy and precision of measurements is within the food industry...

Words: 603 - Pages: 3

Free Essay

Industrial/Organizational Psychology Paper

...that the early psychologists were attempting to combine psychology with the organization of business’s (Spector, 2008). There are two scientists in particular that are accredited with the founding studies of industrial/organizational psychology. These two scientists are Huge Munsterburg and Walter Dill Scott who were both professors at Universities. Huge and Walter both had a common interest in employee selection and the application of psychological testing on the subject of the particular industry. Industrial/organizational psychology took a giant jump forward in technological applicability after Frank Gilberth (engineer) and Lillian Gilberth (Psychologist) put together their two individual fields into one outstanding theory of human factor. This theory deals completely with the design of technology for use by people (Spector, 2008). Paradoxically, it was the destruction of World War I and World War II that had the largest impact in the development of industrial/organizational psychology. Headed up by psychologist Robert Yerkes during World War I, a team of psychologist developed the Army of Beta and Army of Alpha group tests. These tests were used to determine mental ability all the way through unit placement. During World War II APA was not involved in the practice of psychology in the real world, it was used only in experimental psychology. In 1944 Division 14 of Industrial and Business Psychology was developed within the APA to deal with the need for a......

Words: 913 - Pages: 4

Premium Essay

Fv Measurement and Global Crisis

...3.1 Stakeholder Theory 4 3.2 Positive Accounting Theory 5 3.2 Efficient Market Hypothesis 7 4.0 Discussion and findings 8 5.0 Conclusion 10 Reference 12 Relationship between Fair Value Measurements with Investor Confidence during Global Financial Crisis Abstract As investor, the needs of information which can reflect accurate financial information matching with current market condition is essential. Using fair value methods and measurement for asset valuation is one of the best accounting methods which can reflect current market condition accurately. But FVA cannot be separated from the critique especially when global financial crisis hit the world. Critique said FVA decrease investor confidence to invest in market which made more illiquid market during the time. In this paper, our aim is to find the relationship between fair value accounting, method, and measurement with investor confidence. We have been searched the data from previous journal that has been worked before to prove our assumption which are Fair value has decrease investor confidence and investor rely on information which is provided only by fair value measurement. 1.0 Introduction and Motivation There have been many studies on the role of FVA to global financial crisis (GFC) which may result in different opinion and open debate in the future. Most of the past research papers consist of the focus of this paper which is to find in depth more on how the fair value (FV) measurement may or may......

Words: 4953 - Pages: 20

Free Essay

Cardinal Utility

...analysis during the Ordinal Revolution initiated by Pareto and not, as many popular histories of utility theory assume, before it. Cardinal utility was the outcome of a discussion begun by Pareto about the capacity of ranking transitions among different combinations of goods. The discussion simmered away during the 1920s and early 1930s, underwent a decisive rise in temperature between 1934 and 1938, and continued with some final sparks until 1944. The paper illustrates the methodological and analytical issues and the measurement-theoretic problems, as well as the personal and institutional aspects that characterized this debate. Many eminent economists of the period contributed to it, with Samuelson in particular playing a pivotal role in defining and popularizing cardinal utility. Based on archival research in Samuelson’s papers at Duke University, the paper also addresses an issue of priority associated with the mathematical characterization of cardinal utility. Keywords Cardinal utility; Ordinal Revolution; Utility analysis; Utility measurement; Samuelson. JEL Classification B13 (History of Economic Thought through 1925, Neoclassical); B21 (History of Economic Thought since 1925, Microeconomics); B40 (Economic Methodology, General); D11 (Consumer Economics, Theory). 1. Introduction Ordinal and cardinal utility are two key concepts of current economic theory. Consumer demand analysis is almost exclusively based upon ordinal utility, which is identified by the......

Words: 11439 - Pages: 46

Premium Essay

Ordinalist and Cardinalist Theories

...Macroeconomic Theory Principles of Economics (Econ 1) 1 EMPLOYMENT AND UNEMPLOYMENT (INTRODUCTION) • The Keynesian revolution was driven by the desire to explain the high unemployment (U) of the 1930’s. • The solutions proposed by Keynes, focused on the use of countercyclical fiscal policy (AD demand management) to cure U. • Hence countercyclical fiscal policy was seen as effective in smoothening business cycles. • Cyclical U is associated with GDP being below equilibrium. 2 EMPLOYMENT AND UNEMPLOYMENT (INTRODUCTION) • But it is possible to have equilibrium U even when GDP is at its potential level. • It is therefore necessary to explain both cyclical and equilibrium unemployment. • Under this topic, we will cover the following: – Measurement and definitions, – Theories of U, – Economic costs of U, and – Solutions of U. 3 EMPLOYMENT AND UNEMPLOYMENT (Definitions and Measurement) • The unemployment rate: It is the ratio of the number of unemployed persons to the total number of persons in the labor force. It is usually expressed as a percentage. • The labor force consists of all those persons who are willing to work at a market equilibrium wage, and who either have jobs or are seeking work. 4 EMPLOYMENT AND UNEMPLOYMENT (Definitions and Measurement) • Discouraged workers: These are people who are willing to work at the going wage, but have given up looking actively for work, because they do not expect to find a job. • They are not registered for......

Words: 1613 - Pages: 7

Premium Essay

Industrial/Organiational Psychology

...applicability after the binding their two fields into one outstanding theory of human factor. This theory deals completely with the design of technology for use by people (Spector, 2008). The largest impact in the development of industrial/organizational psychology was the destruction of World War 1 and World War 2. During World War 1 a psychologist by the name of Robert Yerkes developed the Army of Beta and Army of Alpha group test. These two test were designed to determine mental ability all the way through unit placement. The classical measurement theory states that two types of variables (true scores and errors) are possible in any type of research situation (Spector, 2008). The variable errors are based on hit and miss influences that majority of the time equals zero when averaged in central tendencies. The variable true score is based on concentration and is measured during the process of research. The classical measurement theory entails that individual Pacific behaviors are too untrustworthy to measure any construct (Ones and Viswesvaran, 2002). There are two categories of measurements such as: categorical measurements and continuous measurements. Categorical measurements are groups that are numbered but not representative of quantitative description. Continuous measurements were numbers are representative of quantitative variables. When working with large groups of numerical data into a summary analysis both measurements can be applied. When the industry began......

Words: 711 - Pages: 3

Premium Essay

Heat and Temperature

...Introduction to Heat and Temperature Gonzalo Leon Strayer University 2012/01/27 Introduction to Heat and Temperature Relation between the Study of Heat and Kinetic Theory Kinetic theory can be describes as a scientific theory of the movement of an object. Kinetic theory relates to capacity of a subject to do work on another object due to their motion. Kinetic theory of matter explains that the same is compose of tiny pieces of, atoms or molecules in continues motion. The theory states that the actions of matter inside an object and the actions heat generates. Kinetic theory explains as well the temperature transition by the means of transmission, where thermal powers shows to be conducted throughout matter, heating up cooler regions. This reaction is the delivery of heat or heat flow. Kinetic theory relates to the study of heat due to the fact that once heat is produced, kinetic energy is created as well. Heat energy can convert or transfer its self into kinetic energy that could make a subject move. Definition of Heat and Temperature Heat: Heat could simply be summarize as been energy. It is the delivery of Kinetic energy from one subject to a different one. Heat is conveyed in three different ways: radiation, convection and conduction. An example of heat by radiation could be infrared energy when this one strikes a surface. Heat by conduction occurs when two subjects are in direct contract with one another. Heat by convection can occur as the movement of a......

Words: 905 - Pages: 4

Free Essay


...analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference (p. 142). Other similar descriptions of what econometrics entails can be found in the preface or the introduction to most texts in econometrics. Malinvaud (1966), for example, interprets econometrics broadly to include ‘every application of mathematics or of statistical methods to the study of economic phenomena’. Christ (1966) takes the objective of econometrics to be ‘the production of quantitative economic statements that either explain the behaviour of variables we have already seen, or forecast (i.e. predict) behaviour that we have not yet seen, or both’. Chow (1983) in a more recent textbook succinctly defines econometrics ‘as the art and science of using statistical methods for the measurement of economic relations’. By emphasizing the quantitative aspects of economic problems, econometrics calls for a ‘unification’ of measurement and theory in economics. Theory without measurement, being primarily a branch of logic, can only have limited relevance for the analysis of actual economic problems. While measurement without theory, being devoid of a framework necessary for the interpretation of the statistical observations, is unlikely to result in a satisfactory explanation of the way economic forces interact with each other. Neither ‘theory’ nor ‘measurement’ on their own is sufficient to further our understanding of economic......

Words: 736 - Pages: 3

Premium Essay

Managing Customers and Time

...more ability to influence Burger King. Before we answer the question in the title, we have to consider whether one measurement basis could be used for all financial statement purposes, or could different bases be used for different purposes? Should the same basis (bases) used for financial statements also be used for other aspects of financial reporting, or could different bases be used outside the financial statements? To start off with an overview, the Conceptual Framework provides a foundation in the form of objectives of financial reporting and characteristics of reported information. Both IASB and FASB have an existing conceptual framework but they have not been updated for more than 2 decades. As a result, the Boards decided to have a joint agenda project to converge and update the existing frameworks and to provide additional guidance for the users. Such convergence project attempts to create a complete and common framework that both Boards will use to develop and revise their accounting standards. The Conceptual Framework should identify relevant factors in selecting a measurement basis, rather than limiting to only one measurement basis or combination of measurement bases. There are problems, for example, if measurement is based on fair value only. The objective of fair value is to reflect the market price of an asset or liability on the measurement date (Bence and Fry, p.15). If there is no available market price, the objective is to estimate what the......

Words: 1218 - Pages: 5