Economic essays

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Monograph

Identifikator:: 1753623200

URN:: urn:nbn:de:zbw-retromon-136107

Document type:: Monograph

Title:: Economic essays

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1927

Scope:: viii, 368 S.; Ill., graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: A statistical method for measuring "marginal utility" and testing the justice of a progressive income tax / Irving Fisher

Collection:: Economics Books

166 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK Discussion of the Results Our two chains of calculations show that if we take as our unit, or “one wantab,” Ws, the want-for-one-more dollar of Case 2 in Evenland,—we can compute the wants-for-one-more dollar, Wi, and Ws, in Cases 1 and 3 in Oddland. These are .75 and 3315 wantabs respectively. We may express the result by saying: In one country, Oddland, where food prices are 4/3 as high as in another country, Evenland, a family, Case 1, so circumstanced as to choose the same food ration as a given family, Case 2, in Evenland, will esteem the dollar 34 as much. That is, the want- for-one-more unit of food being the same in the two Cases, that for one more unit of money will vary inversely as the price of food. Similarly the want-for-one-more unit of housing accommoda- tion being the same in Cases 2 and 3, that for money varies inversely as the price of housing. Rents of any given quality being three times as high in Oddland as in Evenland, the desire for an extra dollar in Case 3 is 14 as great as it was in Case 2. These two simple and obvious comparisons, each being between a pair of Cases, taken one in Oddland and the other in Evenland, enable us next to compare the two Cases in one and the same country, Oddland. We can now say that the wants-for-one-more dollar in Cases 1 and 3 are as 34 is to 14 (or as .75 to .3314 or as 100 to 44 4/9). It will be noticed that these figures depend solely on the price ‘ndexes. The budget ratios are not involved in the two chains. We have, in effect, used Evenland conditions merely as a measuring rod by which to compare the two cases in Oddland with each other. In order that these two Cases should show any contrast it is essential that the two prices—those of food and of rent—shall, in Oddland, bear different ratios to their prices in Evenland. If, instead of the widely different price indexes 4/3 and 3/1 or (1.3314 and 3.00) we had had equal indexes, such as 1.50 and 1.50, the two Cases 1 and 3 would show no contrast at all in the wants-for-one-more unit. We have reached. as our first numerical result, that, as to the

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