Part of the blame may be the use of linear regression by appraisers. However, it should be noted that it is not clear what percentage of appraisers actually use regression and of those who do, what percentage actually make time adjustments based on the results.

The problem with linear regression is that it is completely oblivious to changes in trends. Its underlying assumption is that there is only ONE trend. For example, median home prices in areas of the “Inland Empire” of California were dropping in 2010. Around January 2011, according to statistical analysis with non-linear methods, a sudden shift occurred from a negative to a flat trend in the median prices. An appraiser who combines 2010 with 2011 data for linear regression will continue to see a downward trend that appears to be applicable to 2011 adjustments. This creates both a downward bias in estimates of market value and correspondingly a damaging feedback mechanism whereby [lower price estimates] -> [lower sale prices] -> [lower prices estimates] -> [and so on].

Some may argue that the solution to the problem is simply to limit linear regression to smaller time periods. However, the problem is that this leaves the decision as to defining the time periods to the appraisers – which opens the door to bias.

On the other hand, non-linear regression, either curvilinear or piecewise linear, makes the decision of where to make the breaks in trends based on unbiased mathematical methods. Thus, this should be the ONLY method allowed for appraisers to use!

Consider the following equation as a starting point for valuing human life:

[Individual lifetime measured in some unit of time]/[infinity] = 0

This can be interpreted to mean that a single life is infinitely rare regardless of how long it exists, in comparison to the infinite duration of non-existence. If you place positive value on your own life, then you could conclude, combining the two, that your own life is infinitely precious. One might conclude as well, in comparing the quality of one’s life to absolute nothingness, that no matter how torturous it is, it is still infinitely precious. It seems that this belief is built into our genes, as most life forms struggle for survival in even the harshest conditions. Perhaps we might find somewhere in this traces of the proverbial “God”. Perhaps the location of God is somewhere between our mind and our DNA and the collective existence in the minds and DNA of all humans – and quite possibly other life forms. In this light, there may be some substance to the Buddhist concept of reincarnation.

Let tu = time unit and vu = value unit, then [Humankinds lifetime in tu] x [Individual impact on humankind measured in vu/tu] = [Individual’s value in vu] (positive = Heaven and negative = Hell, with possibly different levels in the finite domain – but interestingly only one level [either heaven or purgatory] in the infinite domain – so the existence of different levels or rings of Hell in Dante’s Inferno is, logically speaking, transitory from the point of view of valuation and measurement and when totalled over an infinite amount of time)

In another vein, one can argue that each person has an impact on his environment that will survive after his death. It may be very small and it may diminish with time in succeeding generations. However, that impact, no matter how minor, no matter in what units we might measure it, WHEN DIVIDED BY ZERO – is infinitely large. Note that this logic assumes that the “environment” continues to eternity. If the environment does not continue to eternity, the individual’s impact, no matter how great, eventually ends in finite terms. You see that in this case, we are not talking N/ [infinity] but rather [infinity] x N. The idea, in other words, is that if humankind exists to eternity, just possibly any person’s impact on society, regardless of how minor, is infinitely important. In a sense, this becomes the realist’s concept of heaven and hell. When a person dies, they leave behind their impact on the environment. It has a net effect of good or evil, depending on your beliefs, that continues as long as humankind exists.

An interesting conclusion one can draw from this line of reasoning is that it is mathematically and logically adivsable for evil people to strive for the eventual termination of mankind, so as to reduce their sentence in Hell from infinite to finite terms and thus to nothingness. Of course, for good people, the opposite is true. Thus we see one reason for the eternal “struggle” between good and evil. “Darth Vadar” is a real possibility.

A person’s impact on his environment is often measured by decision-makers, biographers and researchers for those who are or have been in leadership or key decision-making positions, as they often leave behind a legacy defined in terms of appointments and other long-term decisions. This is probably most evident in the often emotional confirmation proceedings of presidential Supreme Court nominations by the Senate.

Another example of where such valuation occurs, is when judges sentence convicted felons to severe punishment such as a discretionary death penalty. – In essence a measure is taken of such an individuals absolute sum of negative contributions together with the net sum of all good and evil contributions he has known to have made to society according to the best judgment of the judge, no doubt with advice from counsel and giving consideration to social standards. In additional, some kind of valuation occurs of the persons character and personal attributes in order to predict his likely behaviour. In the end, as nebulous as it may seem, some kind of value is arrived at that enables a decision to be made. The implicit thresholds for sentencing have themselves corresponding values that can be compared to values arrived at for the individual being sentenced.

While most would think that such moral and legal issues should be outside the domain of Valuation Engineering; the science might as well learn to deal with them going into the future – as there will continue to be an increasing number of unbiased, rule based valuations needed that are going to directly impact the lives of people. Recent examples, would be valuations of green energy features in homes, and detrimental value from environmental pollution. Or more importantly – building valuation logic into future robots.

http://www.thetech.org/robotics/ethics/shanks_q3.html   ( Tom Shanks, Ph.D. of the Markkula Center for Applied Ethics )

Of course the problem with the foregoing view of Dr. Shanks, is the same problem as with nuclear weapons: Namely, if the enemy has or can build effective killer weapons of a given type, then we [the enemy's enemy] are much better off to have them as well. Some argue that drone planes such as the Predator are under human control and shall alway be. However, there have been reports that this is not always they case, they can and are programmed to work semi-autonomously at times. In any case, robotic weapons that can act on their own can respond much faster without human intervention. With robots fighting robots, the edge will then go to those robots operating without human intervention. Thus we are back to square one on the valuation issue: How to build complex valuation logic into automated machinery and/or robots.