The nature of capital and income

Bibliographic data

Monograph

Identifikator:: 102659555X

URN:: urn:nbn:de:zbw-retromon-82920

Document type:: Monograph

Author:: Fisher, Irving http://d-nb.info/gnd/118533541

Title:: The nature of capital and income

Place of publication:: New York

Publisher:: The Macmillan Company

Year of publication:: 1923

Scope:: XXI, 427 Seiten

Digitisation:: 2019

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part III. Capital and income

Collection:: Economics Books

Sec. 2] THE RISK ELEMENT 269 circumstances of each case; and his final estimate of the chance that a particular building will burn, a particular ship founder, or a particular person die, is based on all the data available, among which the data supplied by statis- tics are an important but by no means the sole element. To apply this idea of chance to an economic example, consider a gold mine. What is the chance that it conceals a rich lead of ore? The ordinary man makes an estimate, based on his experience or inexperience. The geologist has additional knowledge and would make a different esti- mate. In actual fact, however, gold is either actually there in certain definite quantities, or is totally absent. It is a coin held in nature’s closed hand. §2 But, in showing that chance is purely a psychological and not an objective magnitude, we are still far from de- fining chance as a mathematical magnitude. In order to measure chance, it is necessary to state (1) when two chances are equal or unequal; and (2) when one chance bears any given ratio to the other. The chance of one event is said to be equal to the chance of another in the mind of a particular individual, when that individual has no inclination to believe that one will occur rather than the other. One of the chances is said to exceed the other when the individual is “inclined to believe” that one event will occur rather than the other. The test of the equality of two chances is mere indecision of opinion — opinion exactly and evenly balanced. Next comes the question of the ratio of two chances. When it is ‘said that the odds in favor of one event as compared with another are two to one, the meaning is that out of three equally probable combinations of condi- tions, two imply the first event and only one the second. Thus, if there are three cards in a hat, of which it is known that only one will draw a prize, the chance against

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