A STATISTICAL METHOD FOR MEASURING ‘MARGINAL UTILITY” 177
Nor does it seem likely that this want-for-one-more food unit
is dependent, in any important degree, on circumstances outside
the budget such as the character of the neighbors’ rations. As to
housing, on the other hand, the want-for-one-more unit will prob-
ably be appreciably affected by one’s neighbors’ standards. The
only way to eliminate this influence is to assume that the same
general social standards apply in Oddland as in Evenland. Prob-
ably, in actual practice, the chief difficulty in the way of accurate
statistical measurement will consist in getting cases differing in
income without differing greatly in the influence of social environ-
ment on the problem. As I see it, this is the only difficulty of
importance.
With this assumed, however, I cannot see any reason to doubt
the substantial truth of the proposition that, when the adjust-
ment of housing accommodation to prices is effective in both
countries, the desire for one more housing unit is the same in
Cases 3 and 2.
Equation (2) Interpreted
We now ask anew, in what sense does the equation, W; F;—
Wy F,, mean that the family wants one more unit of the ration in
Case 1 exactly as intensely as the 2nd family wants one more
unit added to the same, or equivalent, ration in Case 2? Putting
this equation in the form ol = 7 and remembering that the W's
2 1
are per dollar, we see it means that our families’ wants-for-one-
more dollar’s worth of the ration common to Cases 1 and 2 are
inversely as the price indexes in the two countries. Or again, by
using the reciprocal of this price index as an index of the
purchasing power of the dollar, and so putting the equation in
the form:
Wy _ UF;
Wa . 1/F,
he BLE
we may say that the want-for-one-more dollar, or for one more
dollar’s worth of the food ration, varies directly with the pur-
chasing power (in terms of food) of the dollar. In our imaginary
calculations the common food ration of Cases 1 and 2 costs $400
in Oddland and $300 in Evenland, the price index being, in the
two Cases, as 4 to 3, or the purchasing power of the dollar as