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’ 171 wantabs), and the other for Case 3, the corresponding coordinates, or “latitude” and “longitude,” of which are S;—=$1440, W3=.3314 wantabs. These two points are only two out of an indefinite number of points which may be supposed to constitute, or lie on, a curve expressing the law by which the want-for-one-more dollar diminishes in relation to the increase of the number of dollars of income available. This curve is none other than the curve of “marginal utility” of money in relation to the size of one’s income, often described in text books of economics but never, hitherto, envisaged as, even theoretically, derivable from statistics. The slope of such a curve, if ever reliably ascertained, would enable us to determine a juster system of income taxation than that now in vogue based purely on arbitrary judgment or guesswork. Important Equations The nub of the matter lies in the equations signifying that Cases 1 and 2 are alike as to food, while Cases 2 and 3 are alike as to housing. These equations (in the opposite order in which they were found) constitute the following two sets: Sigs F S-- h NS WF, = WF) WiR;, = JIE 2) What has been done is to solve these four equations to obtain the four unknowns, W,, Ws, S;, Ss, assuming S, and W, as known, the former in dollars and the latter being, for convenience, taken as the standard for measuring wantability since no other unit has previously been established. Equations (1) signify that the physical food rations of Cases 1 and 2 are alike and that the physical housing accommodations of Cases 2 and 3 are alike. Equations (2) signify that the marginal wants for like food rations are alike (for Cases 1 and 2) and that those for like housing accommodations are alike (for Cases 3 and 2). A, Ro Assumptions Underlying Equation (1) Re-exzamined But, before going further, it will be well to review critically the hypotheses on which the foregoing reasoning fundamentally

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