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

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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” 177 Nor does it seem likely that this want-for-one-more food unit is dependent, in any important degree, on circumstances outside the budget such as the character of the neighbors’ rations. As to housing, on the other hand, the want-for-one-more unit will prob- ably be appreciably affected by one’s neighbors’ standards. The only way to eliminate this influence is to assume that the same general social standards apply in Oddland as in Evenland. Prob- ably, in actual practice, the chief difficulty in the way of accurate statistical measurement will consist in getting cases differing in income without differing greatly in the influence of social environ- ment on the problem. As I see it, this is the only difficulty of importance. With this assumed, however, I cannot see any reason to doubt the substantial truth of the proposition that, when the adjust- ment of housing accommodation to prices is effective in both countries, the desire for one more housing unit is the same in Cases 3 and 2. Equation (2) Interpreted We now ask anew, in what sense does the equation, W; F;— Wy F,, mean that the family wants one more unit of the ration in Case 1 exactly as intensely as the 2nd family wants one more unit added to the same, or equivalent, ration in Case 2? Putting this equation in the form ol = 7 and remembering that the W's 2 1 are per dollar, we see it means that our families’ wants-for-one- more dollar’s worth of the ration common to Cases 1 and 2 are inversely as the price indexes in the two countries. Or again, by using the reciprocal of this price index as an index of the purchasing power of the dollar, and so putting the equation in the form: Wy _ UF; Wa . 1/F, he BLE we may say that the want-for-one-more dollar, or for one more dollar’s worth of the food ration, varies directly with the pur- chasing power (in terms of food) of the dollar. In our imaginary calculations the common food ration of Cases 1 and 2 costs $400 in Oddland and $300 in Evenland, the price index being, in the two Cases, as 4 to 3, or the purchasing power of the dollar as

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