metrological aspects of an energy-based currency system

1

Metrological Aspects of an Energy-Based Currency System

First International Social Transformation Conference

10 – 12 July 2012, Split, Croatia

Theme: Energy Currency – Energy as the Fundamental Measure of Price, Cost and Value

Steivan Defilla ([email protected])

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AbstractAn energy-based currency or currency system is the only one to implement clearly defined metrological principles as they apply in physical sciences. In metrological terms, money is needed as measurement instrument for economic activity, which is a complex supply and demand driven “income game”. A measurement instrument is however distinct from the measurement unit upon which it is calibrated or standardized and which may designate basic quantities measured in economics such as wealth and value. Energy is the basis for defining a measurement unit for these quantities. This author has proposed an energy-based definition for value called walras in 2007. This definition is materially compatible with the System of International units (SI) administered by the Bureau International des Poids et Mesures in Paris. The exchange rate between the walras and any currency can be called energetic or physiological purchasing power (PhPP) of the currency. Its inverse is the hedonic energy price (HEP) or hedonic walras price (HWP). Both, PhPP and HWP are estimated by hedonic statistical methods. This author has estimated the PhPP and HWP of the Swiss franc in 2003 and plans in his current research to estimate the PhPP and HWP of some further currencies and years. The paper shows that even with an energy-based definition of a wealth or value unit, wealth and value remain clearly distinct from energy.

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Contents

1. Challenges of measurement in economics and finance

2. Basic metrological principles3. Definition of walras as unit for real wealth

or real value4. Pilot estimation of PhPP (physiological or

physical purchasing power)5. Implementing options for Energy Standard

4


• Economic activity: „income game“ (cf. popular marathon, cycling, skiing, yachting or motor racing competition)

• Generic rules (property rules, exchange principle), define the game

• Accompanying rules (e.g. Labour and environmental conditions); „dumping“ corresponds to „doping“

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Three classical market failures(NB: failures that allow some form of cheating)

• Dominant positions, capability to set or influence prices

• External (= not paid for) effects, negative (e.g. from environmental damage) or positive (public goods, public services, no rivalry of consumption)

• Assymetry of information; special case: principal-agent problem (e.g. Failure of systemically important banks) (is co-determined by culture)

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Metrological failure(not to be confused with market failures)

• Linked to measurement of purchasing power

• In sports: clocks are standardised measurement instruments, time units are fix and precisely defined

• In economics and finance: currencies are variable measurement instruments; unit for real wealth, real value = ?

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Contents





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2. Basic metrological principles

• Basic economic quantities: wealth and income• Walras (1874), define wealth: „By social wealth I

mean all things, material or immaterial … that are scarce, that is to say on the one hand useful to us and, on the other hand, only available in a limited quantity”

• Income (or gross receipts): flow of wealth between agents

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Walrasian wealth

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Other economic concepts

• Cost: (useful or useless) losses • Profits (or net receipts): income minus cost• Price: value of goods and services; incremental

income to seller if multiplied by quantity sold• NB: Wealth, income, profit: refer to agents, cost,

price, value: refer to products (= goods or services), cf. UN Central Product Classification Version 2, 2008, http://unstats.un.org/unsd/cr/registry/

http://unstats.un.org/unsd/cr/registry/

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International Vocabulary of Metrology (VIM3, 3rd edition,

http://bipm.org )• Define quantity: „A quantity is a property of a

phenomenon, body, or substance, where the property has a magnitude that can be expressed as a number and a reference” (1.1.)

• “A reference can be a measurement unit, a measurement procedure, a reference material, or a combination of such” (1.1. note 2)

• “A measurement unit is a real scalar quantity defined and adopted by convention, with which any other quantity of the same kind can be compared to express the ratio of the two quantities as a number” (1.9.)

http://bipm.org/

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Measurement procedure

• “A measurement procedure is a detailed description of a measurement according to one or more measurement principles and to a given measurement method, based on a measurement model and including any calculation to obtain a measurement result” (2.6.)

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Measurement procedure (2)

• “A measurement principle is a phenomenon serving as a basis of a measurement” (2.4.); in economics: the market

• “The measurement method is a generic description of a logical organization of operations used in a measurement” (2.5.); in economics: price surveys

• “A measurement model is a mathematical relation among all quantities known to be involved in a measurement” (2.48); in economics: e.g. utility maximisation under budget constraint, cost minimisation under production constraint

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Fruther definitions from VIM3

• “A measuring instrument is a device used for making measurements, alone or in conjunction with one or more supplementary devices” (3.1.); in economics: any currency or numeraire

• “An indication is a quantity value provided by a measuring instrument or a measuring system” (4.1.); in economics: nominal or current prices

• Calibration is an operation that … uses … information to establish a relation for obtaining a measurement result from an indication (2.39); in economics: transforming nominal to real prices

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Calibration in economics

• Simplest example: correcting for inflation, converting USD 2012 to USD 2000:

• Other example: Purchasing power parity, converting USD to CNY (of same year) :

200020002012

2012 30033.1

400USD

USDUSD

USD

200520052005

2005 4.716558.0

400CNY

CNYUSD

USD

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Problems with current methods • Numeraire is consumer basket in both cases• Consumer baskets are not scalars, hence no

measurement units• No transitivity of calibration results in

multilateral PPP, i.e. numerical inconsistency between cross-cutting international PPP comparisons (usually based upon a star index around a base country) and inter-temporal inflation (usually computed as chain index linking each year only to its neighbour, i.e. with variable base year)

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The Anecdote of the Cheated Cheater

A baker once went to the judge to complain that the farmer’s chunks of butter were smaller and smaller every year, which according to him meant that the farmer was cheating and should be fined. Questioned by the judge, the farmer replied that he has not noticed any change and that he was obliged to use the bakers bread loafs as counterweights for setting the weight of his chunks of butter as he had no other counterweights, and that if anyone was cheating, it was the baker.

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Contents


2. Basic metrological principles3. Definition of walras as unit for real

wealth or real value4. Pilot estimation of PhPP (physiological or


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Definition of walras as unit for real wealth or real value

• Absence (refusal?) to use real wealth unit points at anthropocentric vision of economics (wealth and value originate in human brain); => no income game, but income scramble

• Comparison of „wealth“ with „light“, cf. Plato, Socrates: light originates in human eye ...

• Today: light is understood as measurable phenomenon originating from light sources.

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Defining „walras“ in energy terms (1)

• Finality of economic activity is perpetuation of physiological life (metabolism)

• Metabolism is measured as energy/time• Resting Energy Expenditure REE: Mifflin

equations (1990) for males and females, 60 – 65 Watt (1250 – 1300 kcal per day, 1900 – 2000 MJ per year) per person (at rest)

REE (kcal/day, m)=10 x weight (kg)+6.25 x height (cm)-5 x age (y)+5

REE (kcal/day, f)=10 x weight (kg)+6.25 x height (cm)-5 x age (y)–161

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Defining „walras“ in energy terms (2)

• The only extraterrestrial resource is solar energy, the long term global limiting factor of economic activity

• A crucial factor of imited availability is measured as energy/time

• Solar constant measures 1367 W/m2 cross section, or 342 W/m2 on Earth outside atmosphere, or 239 W/m2 at Earth surface with cloudless weather, or 175 W/m2 at average weather conditions.

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Less stringent limits to long term development

• Four types of capital of the capital apporach to sustainability:

• Financial capital (bank deposits, bonds, equity stocks, derivatives)

• Produced capital (fixed capital such as infrastructure, buildings, machinery, livestock)

• Human capital (demography, skills and knowledge, health)

• Natural capital (covering the four spheres: biosphere, atmosphere, hydrosphere, lithosphere)

http://en.wikipedia.org/wiki/Biosphere

http://en.wikipedia.org/wiki/Atmosphere

http://en.wikipedia.org/wiki/Hydrosphere

http://en.wikipedia.org/wiki/Lithosphere

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Definition and interpretation of walras

• “1 walras (Wal) is the real wealth in, or the real value of, 1956.1 MJ of the energy characteristic available in an environment at physical and chemical equilibrium.”

• One walras is interpreted as the theoretical minimum quantity of real wealth consumed during one year by the metabolism of a reference person of female gender, aged 20 years, weighing 53 kg, of height 162 cm (i.e. by the “sleeping beauty”)

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Explanations (1)

• Wealth is a base quantity, similar to luminous intensity, not a derived quantity, hence definition in language form and not as a formula

• Wealth is not energy. If wealth was energy, growth would mean that energy is created from nothing (e.g. Hereafter,assuming an energy price of 10 USD/MJ):

MJMJUSD

USD40

10

400

2012

2012

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SI units named after scholars

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Explanations (2)• 1956.1 MJ equals the Planck (= natural) unit of

energy (PUE), defined by three fundamental physical constants c (speed of light in vacuum), h-bar (Planck constant over 2 pi) and G (Newtonian constant of gravitation) by the formula:

• Avoids having to adapt definition in long term when human physiology is not constant

GcPUE 5

http://physics.nist.gov/cgi-bin/cuu/Value?c%7Csearch_for=speed+of+light

http://physics.nist.gov/cgi-bin/cuu/Value?hbar%7Csearch_for=planck+constant

http://physics.nist.gov/cgi-bin/cuu/Value?bg%7Csearch_for=Newtonian+constant

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Parenthesis: Fundamental Planck units (=1)

2/h

Constant (Symbol)

Measured value (Codata, Nist)

In SI units Interpretation

G 6.6742E-11 Newtonian gravitation

c 299’792’458 Speed of light

1.05457168E-34 Dirac cst. =

k 1.3806505E-23 Boltzmann entropy cst.

c8987551788 Coulomb

force constant

m3

kgs2

m

s

Js

J

K

m

F

kgm3

C2 s2

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Parenthesis: Derived Planck unitsPlanck time 5.39121E-44 s

Planck length 1.61624E-35 m

Planck mass 0.0217645 (= 23.9E+21me) mg

Planck energy 1’956.1 MJ

Planck temperature

1.41679E+32 K

Planck angular frequency

1.85487E+43 Hz

Planck charge 1.87554E-18 (= 11.7qe) C

5cG3cG

Gc

Gc525 Gkc

Gc5

cc

How much is 1956.1 MJ?

• 1 year of resting energy expenditure (REE) of the sleeping beauty as explained above

• 61.99 Wyears or approximately one 60 W lamp during one year

• 1 car tank filling, 52 litres of diesel oil

• 59 litres of gasoline

• 60 litres of olive oil

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Contents



or real value4. Pilot estimation of PhPP (physiological

or physical purchasing power)5. Implementing options for Energy Standard

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Pilot estimation of PhPP (1)

• Problem: Energy is not a good, but a characteristic occurring in many goods, together with other characteristics

• PhPP estimation needs hedonic techniques

• Pilot estimation: 24’000 consumer and wholesale prices, Switzerland, 2003

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• Transforming 24’000 prices into 24’000 transactions by taking into account quantity associated with each price

• Allows to take into account that unit price is decreasing with increasing quantity

• Multiple regression: energy (=numeraire), price, mass and product dummy variables

• Hundreds of models tested; best specification:• lnN = g0 + gPlnP + gMlnM + g1D1 + ... + g6D6 + h


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34

-3

0

3

6

-3 0 3 6

LRest

LNumeraire

Interpretation

• PhPP calculated as first order derivative of N with respect to P at given other covariates

• Natural choice of electricity as other dummy covariate; electricity is energy with highest exergy (i.e. Highest quality energy)

• Hedonic walras price HWP: 102.36 CHF/Wal

• GDP per capita (CH 2003): 577 Wal

• per capita output 577 times vital minimum

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Contents1. Challenges of measurement in economics

and finance2. Basic metrological principles3. Definition of walras as unit for real wealth


physical purchasing power)5. Implementing options for Energy

Standard

Implementing options for Energy Standard

• Fundamental questions:

• How to guarantee that measurement uncertainty does not exceed a cerain level?

• How to favour the systematic diminution of measurement uncertainty?

• What to do with currencies above a given threshold of measurement uncertainty?

• Monetary dumping?37

Functions of money

• Medium of exchange of (nominal) wealth

• Unit of account for (nominal) wealth

• Store of (nominal) wealth

• Standard for denominating (nominal) debt

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Functions of walras• Medium of exchange of (real) wealth: walras can only

perform this function if money supply proportional to final energy supply (needs redeemable currency, Gesell)

• Unit of account for (nominal) wealth: walras is better unit for storing economic and financial information than currencies

• Store of (nominal) wealth: walras become store of nominal wealth only if energy can be used for debt clearing

• Standard for denominating (nominal) debt: Walras can become unit of deferred debts, is better time-storage of wealth than currencies or SDR

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Conclusions

• Metrological failure is worse than any of the three classical market failures.

• It is possible to define a real wealth unit based upon energy and to estimate the physiological or physical purchasing power of currencies with respect to this unit

• Practical aspects of energy based currency system is subject to further research

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Thank you for your attention

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Reserve slides

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Bilateral price indices• Laspeyres (1864/71)

(prices p, quantities q, periods s and t, countries j and k, commodities 1 … N ; Pure inflation or inter-temporal comparison: j=k; pure spatial or international comparison: s=t)

• Paasche (1875)

• Fisher ideal index (1922)

Pjs,ktL

pktn q js

n

n1

N

p jsn q js

n

n1

N

Pjs,ktF Pjs,kt

L Pjs,ktP

Pjs,ktP

pktn qkt

n

n1

N

p jsn qkt

n

n1

N

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Star index vs. Chain index

1999 2000 2001 2002 1999 2000 2001 2002

E.g: Basis US, 2000 E.g: Benchmark Comparison, 2000

QuickTime™ and aTIFF (Uncompressed) decompressor

are needed to see this picture.





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Inconsistency due to basket variationNumerical example, two economically different goods, three periods:

Price in Period 1

Quantity in Period 1

Price in Period 2


Price in Period 3


Superior good 1.00 1.00 0.80 2.00 0.70 3.40

Inferior good 1.00 1.00 1.60 0.80 2.20 0.60

Income (PQ) 2.00 2.88 3.70

Index (1,2) (2,3) (1,3) (1,2)*(2,3)

(star) (star) (star) (chain) Bias

Laspeyres 1.20 1.10 1.45 1.32 13%

Paasche 1.03 1.01 0.93 1.03 -11%

Fisher 1.11 1.05 1.16 1.17 -1%

Numericalexample fromUS BoskinCommissionReport (1996)

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Counter-example: homogenous growthNumerical example, two economically similar goods, three countries:

Price in country 1

Quantity in country 1

Price in country 2


Price in country 3


Inelastic good 1.00 1.00 0.80 1.20 0.70 1.28

Inelastic good 1.00 1.00 1.60 1.20 2.20 1.28

Income (PQ) 2.00 2.88 3.70

Index (1,2) (2,3) (1,3) (1,2)*(2,3)

(star) (star) (star) (chain) Bias

Laspeyres 1.20 1.21 1.45 1.45 0.00

Paasche 1.20 1.21 1.45 1.45 0.00

Fisher 1.20 1.21 1.45 1.45 0.00

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No ideal inflation index• Multilateralization (> 2 countries or years) => inconsistency

remains (cf. Axiomatic and economic approaches to index number analysis (e.g. Diewert, 1995, 1996): None of 10 classes of index methods satisfies all 12 desired criteria

• Dilemmas: Ordering of results is sensitive to either:

- Choice of the base country or base year

- Inclusion of further years or countries

- Inclusion of further goods or services

- Substitution behavior (specification of the implicit utility or production function)

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• Measurement procedure = market• Minimal requirement for value: Value is a real number,

> 0 for goods, < 0 for “bads” • Value is not absolute (a gun is a good for the owner, a bad

for the victim) => value is the result of an interaction between a good and an economic agent

• => Value is not intrinsic to goods, as Marx believed, but highly extrinsic or interactive: A fridge has less value to the Eskimos than to the Kuwaitis

• Example of a physical interactive property: e.g. weight of objects (depend on the surrounding gravitation) ≠ mass (intrinsic)

• Marginal value (or utility) of numeraire must be constant => can only be guaranteed for a physical phenomenon

Optimal numeraire choice

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Optimal numeraire choice (2)1) Numeraire must have a unique ( “physical”) value when

interacting with a given environment, independent from its production cost, market price (= collective valuation) or from any subjective valuation; only numeraire must be bought for its physical value

2) Must be a scalar (a basket = mix = the outcome of a process) 3) Must not have quality variations that influence its value

(excludes labor and services as numeraire choice)4) Must be marketed & not have a zero market price (division

by zero; excludes non-marketed goods, e.g. air, sea water and subsoil natural resources)

5) Must be a one-time consumable; value of durables is either not unique (depends on a number of possible uses) or not known at initial sale (e.g. for durables such as a house: use value is determined only at the end of its life cycle; for real estate, life cycle duration --> ∞)

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Optimal numeraire choice (3)

6) Numeraire must not to be a purely man-made product (might be altered in quality or disappear) nor produced by a single enterprise (danger of price manipulation). This is the main problem with the Bic Mac Index http://www.economist.com/markets/Bigmac/Index.cfm which otherwise would satisfy all the other criteria

7) Numeraire to be part of the consumption basket of all economic agents (independently of individual wealth level) and of all societies (independently of economic development level). Value results from interaction of biological organisms with their environment in order to acquire resources

http://www.economist.com/markets/Bigmac/Index.cfm

51

Optimal numeraire identification (1)• In physical sciences, one concept satisfies all these criteria:

Available energy (Gibbs, 1873), later called exergy (Rant, 1956) = maximum useful work a system can theoretically yield in a reversible process when interacting with a precisely defined environment, which is in physical and chemical equilibrium and which actively contributes to the process

• Exergy in closed systems: E = Wrev = U+paV –TaS > 0• Yield of closed stationary systems: -Prev = ˙Q(T - Ta)/T• Yield of reversible chemical reactions, i.e. before mixing : • E = -Wrev = -RG(pa, Ta) = -RU(V)-paRV + TaRS(pa, Ta) <0 • -Wrev work available in cold combustion, e.g. in fuel cells• -RU(V) = isochoric GCV following ISO standard 1928:1995

for solid fuels, the DIN 51900-1:2000-04 standard for liquid fuels

Carnotfactor

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Optimal numeraire identification (2)• Reversible mixing: Energy of mixing to be used e.g. in

osmotic power stations (=> scarcity value is a physical concept)

• Exergetic value (EXV) of combustible -RG(pa, Ta):

Ex(pa, Ta) = -RG(pa, Ta) + E(pa, Ta) • Correction term depends on chemical equilibrium of the

environment• If oxygen is abundant (cf. terrestrial atmosphere), EXV of

oxygen < EXV of fossil fuel• If oxygen was very rare, EXV of oxygen > EXV of fuel• Exergy of reactant depends on its relative abundance (=>

exergy is an interactive quality, similar to value)

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Standard equilibrium environment• Standard temperature (298.15 K, cf. calorimetric bomb, ISO

standard 1928:1995 for solid fuels, DIN 51900-1:2000-04 for liquid fuels) and standard pressure (100 kPa) is not sufficient

• Chemical and phase equilibrium environment at standard T is needed; p will be the resulting pressure of this equilibrium atmosphere at sea level

• Calculation of earth-like equilibrium attempted by Diederichsen, 1991: Equilibrium environment = minimal Gibbs potential of 17 most common elements and 971 most common chemical compounds of the earth‘s atmosphere (all), hydrosphere (< 100 m depth) and lithosphere (< 0.1 m depth)

• In reality, terrestrial environment is not in equilibrium• Sensitivity of PhPP to choice of environment: only 0.01%.

54

Exergy is neither numeraire nor value• Suppose exergy was the numeraire and hence the exergy price

was the price deflator (= numeraire price) with dimension [CHF / J ] , then all the real (i.e. deflated, calibrated) quantities (real wealth, etc.) would have energy dimension [J]:

• Instead, exergetic unit (J) is proportional to exergetic numeraire (= value unit) allowing to express real wealth as “exergy value equivalent”

• Value is broader than exergy: Value of durables is linked to their productivity

• Total exergy decreases in economic growth, whereas total value (i.e. total wealth) increases

• => Value not reducible to any other quantity, hence language definition of value unit needed (no formula definition possible)

Problem: Economics would violate basic physical conservation principles][

]/[

][J

JCHF

CHF

55

Natural value unit and its interpretation

• Natural units of the Universe are the Planck units• System of units that is based upon the

fundamental constants G, c, , k, c (all taking the numerical value of 1)

• Planck units simplify physics, e.g. Einstein’s formula becomes: E = m if c = 1

• Derived units by mathematical formulae • Planck units “remain constant for all times and all

civilizations, even for non-human ones” (Max Planck, 1899)

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Name and definition of the natural value unit• Naming convention of the SI (metric system): Some

units are named in honor of scholars having contributed to the discipline (e.g. hertz, newton, pascal, joule, …)

• In economics: Léon Walras (1834-1910), first to have written a multi-equation model of general equilibrium (1874-1877) and having proved the existence of exactly one numeraire at equilibrium

1 walras (Wal) is the value of (=1956.1 MJ) energy available in an environment at physical and chemical equilibrium <=> 1 Wal is the value of 1956.1 MJ exergy

Gc5

57

Economic and physiological interpretations of 1956.1 MJ

= 543 kWh electricity

= 1 year lamp burning at 62 W

= 117 kg sugar

= 60 l (=55 kg) olive oil

= 52 l (=43 kg) diesel oil

= 59 l (=44 kg) gasoline

>= 1 car tank

= 150 – 200 l wood cuts

= 60 – 90 kg hard coal

= 1 year energy consumption at 1280 kcal/day = Resting metabolic rate of the Sleeping Beauty (female person, 20 years old, 53 kg, at sleep)

58

Hedonic Estimation of the PhPP of Money

Consider all commercial energy-carrying products available at the final transformation stage as one single good having different characteristics => One hedonic equation per region and period; choose the better one of two regression models:

• Primal regression model (regress transaction price P on numeraire N and other characteristics Cj ; linear model: n = HNP)

• Dual regression model (regress numeraire N on transaction price P and other characteristics Cj ; linear model: p = PhPP = 1/ n)

where

KKN CCNP ...110

KKP CCPN ...110

KKN

CCPN ...1

110

59

Best model: dual log-log specification with dummies

Monotonicity

=> Necessary to choose standard values for D and M, (D and M) If D and M correspond to electricity => we find empirical near-linearity of PhPP(P, D, M) in P and of HNP(N, D, M) in N respectively

Multi-variability of both quantities of interest, PhPP = inverse HNP (hedonic numeraire price)

ln N 0 P ln P M ln M 1D1 ...6D6

N

P(P,M,D)

1

P NN,M,D

where M = mass and D1 ... D6 are dummies of product categories

60

Pilot Application: Switzerland, 2003Data: 24249 disaggregated energy price observations from Swiss Federal Statistics Office’s Consumer Price Index and Producer Price Index surveys. No food prices included yet.

Dependent variable is: LNumeraireNo Selector

R squared = 99.5% R squared (adjusted) = 99.5%s = 0.2607 with 24249 - 9 = 24240 degrees of freedom

Source Sum of Squares df Mean Square F-ratioRegression 321798 8 40224.8 591878Residual 1647.38 24240 0.067961

Variable Coefficient s.e. of Coeff t-ratio probConstant 2.76023 0.0993 27.8 ≤ 0.0001Lprice 0.997242 0.0016 636 ≤ 0.0001Lmass 0.143091 0.0019 76.5 ≤ 0.0001DistrHeating -12.2567 0.1447 -84.7 ≤ 0.0001CarFuel -10.1382 0.1345 -75.4 ≤ 0.0001ELHOil -9.62431 0.1395 -69.0 ≤ 0.0001RawWood -9.52903 0.1430 -66.6 ≤ 0.0001Gas -9.25687 0.1348 -68.7 ≤ 0.0001DryWood -8.38461 0.1435 -58.4 ≤ 0.0001Electricity 0 0 • •

61

Graphical fit

-3

0

3

6

-3 0 3 6

LRest

LNumeraire

62

Results and interpretations

• HNP and PhPP nearly constant in transaction size (near-linearity)• „The Hedonic Numeraire Price HNP at transaction size of 1 Wal (= the

annual minimum cost of life = the cost of the annual physiological energy consumption of a Sleeping Beauty if bought in one transaction) was 102.36 CHF / Wal in CH in 2003“ => HNP (CHF 2003) is the deflator (= denominator) transforming nominal CHF 2003 data to real data

• “The Physical Purchasing Power (PhPP) of the Swiss Franc at transaction size of 1 Wal was 0.010 Wal / CHF in 2003” => PhPP (CHF 2003) is the proportionality factor or exchange rate transforming nominal CHF 2003 data to real data

Value (Wal) 0.01 0.1 1 10 100 1'000HNP (CHF/Wal) 101.06 101.71 102.36 103.01 103.67 104.33PhPP (Wal/CHF) 0.010 0.010 0.010 0.010 0.010 0.010

63

Real Annual Per Capita Income (= e.g. real GDP in Wal/person)

• CH, 2003: Real GDP = 577 Wal/(person*year) => Shows how many times the average CH inhabitant earned the annual biological minimum in 2003

• Econophysics: Analogy between temperature and average income (e.g. Dragulescu / Yakovenko, 2000, 2001, Mimkes et al., 2005) becomes precise

• Both, average real income in Wal/(person*year) and absolute temperature (in K) are proportional to energy with proportionality factors: [1956.1 MJ / Wal] per person per year for real income resp. [k/2]= [0.6903252E-23 J/K] per degree of freedom for T

64

Nominal Energy Prices (CHF / Planck Energy)

020406080100120140160

1 6 11 16 21 26 31 36 41 46 51 56

CHF

< electricity > < gas > DH < oil ><wood>

65

Nominal Exergy Prices (CHF / Planck Energy)


0

100

200

300

400

500

600

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58

CHF

66

Real Energy Prices CH 2003 (Wal / GJ)


0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.81 4 7

10

13

16

19

22

25

28

31

34

37

40

43

46

49

52

55

58

Wal / GJ

67

Real Exergy Prices CH 2003 (Wal / GJ)


0

0.5

1

1.5

2

2.5

3

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58

Wal / GJ

68

Validity and use of PhPP and HNP• PhPP and HNP validity range: Provisionally

best model is valid for transaction sizes from 0.005 – 1260 Wal (0.50 – 130’000 CHF; above till 50 Mio. CHF: Slightly less good model) vs. PPP and CPI: Only punctual validity for unit quantity of each item

• Use Wal e.g. in international climate negotiations: Possibility to convene national CO2-targets as: tCO2 / Wal GDP (vs. before: there was no consistent multilateral method for measuring real GDP)

69

Conclusion• Value intrinsic, value = result of interaction

• Money = non-calibrated measurement unit, needs calculation of conversion factors with respect to a fix value unit

• Natural value unit (“Planck value”) is based upon available energy and can be found in the physical Universe; unit is fix, value is interactive

• Hedonic estimation of physical purchasing power PhPP of money yields conversion factor, based on agents’ behavior, not on a legal decree (contrary to the Gold Standard)

• Natural value unit is of human scale, has physiological interpretation in terms of cost of life at minimal activity

• Cost of life at minimal activity is a more stable and more precise unit than cost of living and inflation indices

metrological aspects of an energy-based currency system

Documents

energy currency energy

measurement unit

real wealth

energybased currency

value unit

energy standard

energybased definition

hedonic energy price