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

A STATISTICAL METHOD FOR MEASURING ‘MARGINAL UTILITY’ 167 two supposed Cases in Oddland, they value the dollar differently in the ratio of 100 to 44 4/9. Calculating S; and Ss from Ss Evidently this contrast in the valuation of the dollar is not due to any contrast between the two families, since by hypothesis they are as like as two peas, but is due entirely to the contrast between their economic circumstances. But, up to this point, the only signs of this contrast in their circumstances are indirect ; the hypotheses as made, imply differences in their circumstances in prescribing that Case 1 chose the same food as Case 2 at food prices only a third greater, while Case 3 chose the same housing as Case 2 at housing prices three times as great. If, as compared with Case 2, Case 3 could thus afford to pay much more for the very same sort of tenement while Case 1 could only afford to pay a little more for the very same sort of food, it certainly looks as though Case 3 were richer than Case 1. What we want to know next is: How much richer is Case 3 than Case 1? Our next problem, then, is to find out what were the total incomes’ or expenditures, S; and S; of Case 1 and Case 3. We can calculate S; and S; from S, by chains of reasoning analogous to the two chains of reasoning by which we have just calculated W; and W3 from Ws, although our new pair of chains consists of a larger number of links. Our first link is assumed. It is that S.=$600. The second link is ¢s, the percentage of Ss spent by Case 2 for food. This percentage is readily found from the budget tables. Suppose it to be 50%. That is, the budget tables of Evenland show that in a family there which has an income and annual expenditure of only $600, 50% thereof is spent for food. Our third link is the same thing—the food expenditure of Case 2,—but expressed in actual dollars. We find this, of course, simply by multiplying S, by $2. The result is S; ¢, or, in figures, $600} .50=$300, spent for food by Case 2. The next step is to ascertain the number of food units (“pounds”) thus bought for S.¢, dollars. This is found by divid- RT assumed, that budgets balance in all cases, income being equal to expenditures or, if we wish to be more realistic, that income exceeds expenditures in all cases by a fixed percentage, say 10%, as savings.

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