NOTE ON STATISTICS OF CONSUMPTION. 173 CH. IV. consumption of the lower, middle and working classes in Saxony in 1857, BOOK III. may be quoted here; because it has acted as a guide and a standard of comparison to later inquiries. It is as follows :— The only systematic inquiry which can at present be quoted for England, is that made by Mr Burnett, the able Labour Correspondent of the Board of Trade. In 1887 he sent out 730 inquiries to selected workmen, and in response he received 34 fairly complete returns, from which the following table was compiled: TABLE SHOWING SUMMARY OF AVERAGE PROPORTIONS OF EXPENDITURE TO INCOME BY BOOK III. CH. IV. Like all other figures of the kind they suffer from the facts that those who will take the trouble to make such returns voluntarily are not average men, that those who keep careful accounts are not average men; and that when accounts have to be supplemented by the memory, the memory is apt to be biassed by notions as to how the money ought to have been spent, especially when the accounts are put together specially for another's eye. And in this particular case there is the further evil that the total number of returns is small, and the average results therefore rest on narrow bases. But the Report contains much instructive information; and those who have special opportunities of observing the methods of living of any industrial classes may find it convenient as a basis for registering their own observations: for this border-ground between the provinces of Domestic and Public Economy is one in which excellent work may be done by many who are disinclined for more general and abstract speculations. CHAPTER V. THE CHOICE BETWEEN DIFFERENT USES OF THE SAME THING. IMMEDIATE AND DEFERRED USES. CH. V. bution of a means be gratifica wants. § 1. THE primitive housewife finding that she has a BOOK III. limited number of hanks of yarn from the year's shearing, considers all the domestic wants for clothing and tries to The distridistribute the yarn between them in such a way as to con- person's tribute as much as possible to the family well being. She tween the will think she has failed if, when it is done, she has reason gifto regret that she did not apply more to making, say, socks, ferent and less to vests. That would mean that she had miscalculated the points at which to suspend the making of socks and vests respectively; that she had gone too far in the case of vests, and not far enough in that of socks; and that therefore at the points at which she actually did stop, the utility of yarn turned into socks was greater than that of yarn turned into vests. But if, on the other hand, she hit on the right points to stop at, then she made just so many socks and vests that she got an equal amount of good out of the last bundle of yarn that she applied to socks, and the last she applied to vests. This illustrates a general principle, which may be expressed thus: If a person has a thing which he can put to several uses, he will distribute it between these uses in such a way that it has the same marginal utility in all. For if it had a greater marginal utility in one use than another, he would gain by taking away some of it from the second use and applying it to the first1. 1 Our illustration belongs indeed properly to domestic production rather than to domestic consumption. But that was almost inevitable; for there are very BOOK III. But a person too much of one thing for all uses, and too : One great disadvantage of a primitive economy, in which there is but little free exchange, is that a person may easily have so much of one thing, say wool, that when he has may have applied it to every possible use, its marginal utility in each use is low and at the same time he may have so little of some other thing, say wood, that its marginal utility for him is very high. Meanwhile some of his neighbours may be in great need of woo/and have more wook than they can turn to good account. If each gives up that which has for him the lower utility and receives that which has the higher, each will gain by the exchange. But to make such an adjustment by barter, would be tedious and difficult. little of another. Barter is a partial remedy. The need for be distri buted in many lines of so as to The difficulty of barter is indeed not so very great where there are but a few simple commodities each capable of being adapted by domestic work to several uses; the weaving wife and the spinster daughters adjusting rightly the marginal utilities of the different uses of the wool, while the husband and the sons do the same for the wood. § 2. But when commodities have become very numerous which can' and highly specialized, there is an urgent need for the free use of money, or general purchasing power; for that alone can be applied easily in an unlimited variety of purchases. purchase And in a money-economy, good management is shown by so have equal adjusting the margins of suspense on each line of expenditure marginal that the marginal utility of a shilling's worth of goods on each line shall be the same. And this result each one will attain by constantly watching to see whether there is any thing on which he is spending so much that he would gain by taking a little away from that line of expenditure and putting it on some other line. utilities in each. Illustrations. A chief use of domestic accounts. Thus for instance the clerk who is in doubt whether to ride to town, or to walk and have some little extra indulgence at his lunch, is weighing against one another the (marginal) utilities of two different modes of spending his money. And when an experienced housekeeper urges on a young couple few things ready for immediate consumption which are available for many PRESENT AND FUTURE PLEASURES. CH. V. 177 the importance of keeping accounts carefully; a chief motive BOOK III. of the advice is that they may avoid spending impulsively a great deal of money on furniture and other things, which though some quantity of them be really needful, do not when bought lavishly give high (marginal) utilities in proportion to their cost. And when the young pair look over their year's budget at the end of the year, and find perhaps that it is necessary to curtail their expenditure somewhere, they compare the (marginal) utilities of different items, weighing the loss of utility that would result from taking away a pound's expenditure here, with that which they would lose by taking it away there: they strive to adjust their parings down so that the aggregate loss of utility may be a minimum, and the aggregate of utility that remains to them may be a maximum1. against § 3. The different uses between which a commodity is distributed need not all be present uses; some may be present and some future. A prudent person will endeavour The balancing to distribute his means between all their several uses present of future and future in such a way that they will have in each the pleasures same marginal utility. But in estimating the present mar- present. ginal utility of a distant source of pleasure a twofold allowance must be made; firstly, for its uncertainty (this is an objective property which all well-informed persons would estimate in the same way); and secondly, for its difference in the value to them of a distant as compared with a present pleasure (this is a subjective property which different people would estimate in different ways according to their individual characters, and their circumstances at the time). 1 The working-class budgets which were mentioned in the Note at the end of the last chapter may render most important services in helping people to distribute their resources wisely between different uses, so that the marginal utility for each purpose shall be the same. But the vital problems of domestic economy relate as much to wise action as to wise spending. The English and the American housewife make limited means go a much less way towards satisfying wants than the French housewife does, not because they do not know how to buy, but because they cannot produce as good finished commodities out of the raw material of inexpensive joints, vegetables &c., as she can. Domestic economy is often spoken of as belonging to the Science of Consumption: but that is only half true. The greatest faults in domestic economy, among the sober portion of the Anglo-Saxon working-classes at all events, are faults of Production rather than of Consumption. |