Stock markets worldwide have welcomed in 2016 with major drops. The Dow Jones, the S&P 500, European, emerging market and Chinese indices have all registered significant declines to start the year.

Like the constant deluge of polls about how many Americans are likely to vote for which candidates, these stock indices are reflections not of any concrete reality, but of the compilation of millions of people’s expectations about the future.

Attempting to analyze and make sense of these constant streams of new data always reminds me of economist Kenneth Boulding’s definition of econometrics: “the study of the celestial mechanics of a nonexistent universe.”

And while guesses about what Apple or General Electric might be worth in six months, or how many votes Donald Trump or Bernie Sanders might get in Iowa in February, are certainly efforts to peek into not-yet-existent universes, they do possess the utility of forcing us to think about the future. They serve as devices to get our attention.

If that attention is limited to wondering about tomorrow’s prices and polls, and if, as citizens, we become merely day traders in the expanding universe of speculation, we do little to affect our course in that universe.

If, on the other hand, we use the attention-grabbing effect of daily price indices and polls as motivation to dig more deeply into the reasons behind whatever numbers pop up on a given day, the value of the indices and polls begins to emerge. They become, or can become, portals into more detailed, useful and personally relevant information. And they can lead us into deeper understanding of the policy issues we face as citizens.

Considering this attention-grabbing value of transient numbers, I have often thought that towns and cities in Maine would benefit from the creation of indices of town “worth.”

We are regularly bombarded with lists of the best cities for retirement living, for school test scores and athletic wins and for local food sources. Fill in the blank for all the other ways that towns and cities are ranked. But when it comes to thinking about how to spend our public money, we are decidedly backward-looking.

In most municipalities, the overwhelmingly dominant number in budget preparation and debate (apart from the inertia embodied in the prior year’s budget) is total taxable property value as determined by the local assessor as of April 1.

That’s the number that almost always sets the discussion for what towns can and cannot afford to spend on public goods and services. And it is a number determined by a meticulous focus in the rearview mirror: What was the fair market value of taxable property in our town two months before we start spending money?

In the case of school spending, that decisive number (the so-called state valuation) is even older – two years and two months before school budgets actually begin operating. Yet budgets are inherently forward-looking: What are we going to spend to meet our needs next year?

I recently read that a professor of finance at Indiana University has, for several years, been calculating the value of major college football programs if they could be bought like franchises. The interesting part of his analysis of revenues, expenses and risk factors for this year is that the overall value of this year’s group of bowl teams dropped nearly 2 percent even though revenues grew at nearly twice the rate of expenses.

Why? Because of the growing uncertainties surrounding the college game. Will players have to be paid in future years? Will concern for concussions diminish participation or television viewership? Will more colleges diminish their commitment to big-time sports? In short, values today must include estimates of risks about tomorrow if they are to reflect any reasonable view of reality.

How often do municipal budget negotiations include serious consideration of projections of housing starts, or housing values, or population projections, or school enrollment projections, or the types and costs of public services that tend to be required by different age groups and neighborhoods?

And how often in this age of ubiquitous information and big-data analytic capability do municipalities have revenue and expense models that allow officials and citizens to imagine different levels of revenues and expenses and derive the various tax rates flowing from each? I don’t know, but I think the number is far less than the number that could benefit from the effort to create such guides to good citizenship and good decision-making.

Charles Lawton is chief economist for Planning Decisions, Inc. He can be contacted at:

clawton@planningdecisions.com

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