Aggregation of Economic Relations

A simplification or aggregation problem is faced by a research worker whenever he finds that his data are too numerous or in too much detail to be manageable and he feels the need to reduce or combine the detailed data in some manner. He will want to use aggregative measures for his new groups. But what will be the effect of this procedure on his results? How can he choose among alternative procedures? In grouping his data and/or relations he must also decide how many groups to use; a smaller number is more manageable but will cause more of the original information to be lost. The research worker seeks a solution to this problem that will best serve his objectives, or those of some decision-maker who will use his results.

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