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” 175 It is assumed that the same or similar grades exist in Oddland except that the corresponding step-up in cost is 33143% higher, r.e., is $1.3314 instead of $1.00. Since we are assuming that each grade costs Case 1 334% more than the same, or corresponding, grade costs Case 2, evi- dently Case 1, paying 3314% more than Case 2, may be said to be obtaining the same grade. A higher grade would be more than the 3314 % higher and a lower grade, less. Now if the two families are assumed to be so much alike in size and character, including tastes, education, and occupation, as well as in any other respect which might affect their want-for- one-more food unit or housing unit, as such units are above defined, the only essential difference between them being in the length of their purses, and the price levels in their respective markets, then, it seems reasonable to assume that their psycho- logical reactions to the same “physical” food rations, or to the same “physical” housing accommodation will be the same. That assumption is here made and, having made it, we need not be troubled by the fact that what has been called “physical” similarity cannot in the complexities of food and housing vari- ations be wholly disentangled from mental judgments. We may rest content with specifying that two food rations are sub- stantially equal, both physically and psychically, if the ratios th and ho are the same. That is, if these ratios are the same, we assume that either family, Case 1, or Case 2, would pronounce the two rations or bills of fare as practically the same, even though they were not absolutely identical. Food and Clothing Assumed Independent But I wish to call attention to an important assumption which is implied. This is that the want-for-one-more unit of food depends only on the food ration and not on the housing accom- modation, nor on any other circumstance differentiating Cases 1 and 2; and, likewise, that the want-for-one-more unit of hous- ing depends only on the housing accommodation and not on the food ration, nor on any other circumstance differentiating Cases 1 and 2. In other words: W; Fy, the want-for-one-more unit of food in Case 1, is assumed to be independent of all variables other than food itself; and so as to W, F.. Likewise W3 Rs, is assumed

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