178 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK
3 to 4. The equation implies simply that the subjective desire for
a dollar, or a dollar’s worth of food, will also be as 3 to 4.
Equilibrium of Dollars Variously Spent
I have used alternatively “a dollar or a dollar’s worth of food.”
But this implies another assumption which must be explicitly
specified, namely, that the want-for-one-more dollar is the same
as the want-for-one-more dollar’s worth of food, and likewise as
to one more dollar’s worth of housing, or of anything else.
This is a familiar theorem in theoretical economics, resting on
the idea that if, temporarily, there is any inequality between
dollars in different uses, the family will speedily rectify it by
spending more money in the direction where a dollar will bring
more satisfaction than in other directions, until perfect equi-
librium is established, whereupon one more dollar spent in any
direction will bring exactly the same satisfaction as if spent in
any other direction. Without such assumption of equilibrium, we
would have not merely one uniform W; in Case 1, but many
diverse W’s which we should have to distinguish as, say Wy, for
a dollar’s worth of bread, W,” for a dollar’s worth of sugar, W,"
for a dollar’s worth of potatoes, etc., all differing slightly from
each other.
Strictly speaking such differences always do exist in some
degree. But while there is never absolute equilibrium in this
world, yet, for all practical purposes, I think we are safe in
pinning our faith to this assumption of an approximate equi-
librium of the want-for-one-more dollar’s worth of all com-
modities and services, at least for all which are easily sub-
divisible.
The only exception to substantial equilibrium which is at all
likely to trouble us in this statistical quest, is in respect to
housing accommodation. Here the adjustments are so slow, that,
with a rapid change in incomes or unequal changes in prices of
foods, rents, ete., several months at least may be required before
the tenants have had time to get their best money’s worth. It
takes time to find the best bargains which the new situation has
created, time to move into new quarters, time to get free of lease
See my Mathematical Investigations, also Auspitz und Lieben,
Untersuchungen iiber die Theorie des Preises, Leipzig (Dunkler &
Humblot). 1889.