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

168 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK ing that number of dollars by Fs, representing the price of food in Case 2. The result is Ss, Numerically this result (since we 2 suppose Fo, the average price of food in Evenland, to be $1 a ‘“pound’”’) becomes $300—$1, or 300 “pounds,” or food units. We now cross over the sea to “Oddland” and study Case 1. As stated in our hypothesis we have assigned to our family, Case 1, the same number of food units as in Case 2. Or, to be more exact, we have allotted to Case 1 such an income as would lead it to choose of its own free will (in view of all the costs of living for food, clothing, housing, and all the rest obtaining in Oddland), the very same (or equally desirable) food as Case 2 buys in Evenland (at quite different prices and out of a quite different income). It follows that the food of Case 1 must be also 300 lbs. Algebraically expressed the food of Case 1 is i 80 1 that Sir 300 “pounds.” From this we can compute S; as soon as we know ¢; and Fi. We know that Fi, by hypothesis, is $1.33%5; 1.e. F,1=%$1.3314, Multiplying this by the last result, namely Se — 300 we obtain Sip; = 400. which is the money paid for food by Case 1. We next find ¢;. The family budget tables in Oddland show, let us say, that a family which spends $400 for food is one which spends thereon 40% of its total expenditure; that is, $1—.40. It is now evident that the total expenditure in Case 1 can readily be found by dividing the expenditure for food Sih; — $400 by ¢1 = 40 giving S; = $1000. er Thus, beginning with S,—=$600, we have ended our chain of calculations with a figure for S;, which was the object of our search. That is S;=¥$1000. The above process, or chain of calculations by which S; is found from S.. may be tabulated as follows:

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