STATISTICS OF CONSUMPTION 85 houses serve as marks of social position and the desire for social esteem is so strong that a large part of surplus income is devoted to keeping up appearances. United A more recent investigation into statistics of consumption Consumpwas made by the United States Department of Labor to ascer- tion in the tain the importance of different kinds of commodities in the States. everyday life of representative families. The results of this inquiry are summarized in the following table: This table is based on a study of as many as 2562 family budgets and is even more suggestive than the former because of its more careful classification of expenditures according to the family income. It indicates the same general relations. Expenditures for food diminish relatively as the family income grows, and the difference is made up by a relative increase in the expenditures for the gratification of other than merely physical wants. Expenditures for rent bear a fairly constant relation to the total income, while expenditures for clothing show a tendency to increase slightly. In addition to these general studies of expenditures in dif- other ferent countries, special studies have been made for particular Investigacities which bring out striking differences in the habits and tions. standards of different racial groups. Thus Miss Byington, in comparing the budgets of the families of steel-workers in *Seventh Annual Report of the Bureau of Labor, 1891, p. 864. Family of Consumption. Homestead, found that colored families with an average weekly expenditure of $12.39 spent 19.6 per cent of this amount for rent and 39.1 per cent for food, while Slavic families with about the same expenditure ($13.09) spent only 15.3 per cent for rent and 45.7 per cent for food. Notwithstanding these differences in details, the average expenditure for the most important item in every wage-earning family's budget, food, is shown to be strikingly uniform for American families in the same income groups. Thus the Bureau of Labor investigation of 1903, covering 5920 families with incomes from $600 to $1000, found that the proportion of the income spent for food ranged from 39.9 to 43 per cent. Mr. Chapin established even closer limits for families in the same income group which he studied in New York City, their expenditures for food ranging between 44.3 and 45.6 per cent. The average found by Miss Byington for her Homestead families in this same group was 42 per cent. There is perhaps no branch of economics in which intensive work yields a larger harvest of suggestive returns than the study of statistics of consumption. Any one may enter this field by making a study of the expenditures of the family group to which he himself belongs and by persuading friends to keep budgets of their expenditures in accordance with some simple but uniform plan. Residents in Social Settlements may do useful work by supplying their neighbors with handy account-books and directing them in keeping records of their expenditures. Such records are valuable for comparison with other calculations, and also the habit of keeping them will-be found a help in determining how income may be best employed. Two Aspects § 50. The subject of consumption may be looked at economically in two different ways. The more familiar way is to regard it as the goal of economic activity and to show how the desire for goods causes them to have value and price and induces people to engage in industrial pursuits. Though perfectly valid so far as it goes, this aspect of consumption must not be exaggerated. The other way of looking at it is as a means of restoring energy. The consumption of goods necessary to efficiency is not merely an end; it is a means to further production. Human beings are not mere goods-consuming automatons. They enjoy activity for its own sake, and the more highly developed they are, the more they are likely to look upon goods as means to the forms of activity they prefer, rather than as ends in themselves. It follows that desire for goods is only one, if the most important, of the motives which control the economic man. Desire for activity is another motive which in individual instances quite outweighs the desire for goods. At the present stage of human and social development the Conclusion. former of the above ways of regarding consumption is believed to be the more accurate and helpful to an understanding of economic phenomena. The latter is, however, applicable already to many individuals and classes and must be kept in view in connection with all problems looking to the future. Economic phenomena are related not as cause and effect simply, but in a continuous circle of causation. Men produce, that is, expend energy, in order that they may consume; but they consume, that is, store up energy, in order that they may again plunge into the activities of production. The ideal round is one in which the pleasures of production are as definite and real as the pleasures of consumption. Unfortunately the conditions of production are still so arduous for the mass of men that work is usually entered upon unwillingly and only under the stimulus of the prospect of pay. In the thought of the average man consumption, or the desire to consume, thus stands as the motive for production. In the following chapters the point of view of the average man is accepted, and economic phenomena are explained by reference to it. The other point of view, which finds work a joy and goods merely aids to further work, receives attention in the closing chapter on Economic Progress. REFERENCES FOR COLLATERAL READING *Patten, The Consumption of Wealth and Dynamic Economics; *Fetter, Principles of Economics, Chaps. IV. and XL.; *Bullock, Selected Readings in Economics, Chap. VIII.; *Marshall, Principles of Economics, Book III.; Ely, Outlines of Economics, Book II., Part IV.; Mayo-Smith, Statistics and Economics, Book I., Chap. II.; *Atwater, Farmer's Bulletin, No. 142, published by the U. S. Department of Agriculture; Family Budgets collected by the Economic Club of London, 1891-1894; Rowntree, Poverty, a Study of Town Life, Chaps. VI., VII., and VIII.; More, Wage-earners' Budgets; Chapin, The Standard of Living Among Workingmen's Families in New York City; Streightoff, The Standard of Living; Byington, Homestead: The Households of a Mill Town; Eighteenth Annual Report of the U. S. Bureau of Labor (1903) on Cost of Living and the Retail Prices of Food. CHAPTER VI VALUES IN USE § 51. As already explained, the term value is used in eco- Two Senses nomics in two different senses, one subjective, or pertaining of Value. to the relation between men and goods, and the other objective, or pertaining to the relation between goods and goods. In this chapter we shall analyze the principles which govern values in use, or values in the first sense. Use Rela tive. The values in use of different goods depend on the inten- Values in sities of the wants which they are to gratify. If each consumer had but a single unit of each kind of good and that good were capable of gratifying only one want the valuation process would be comparatively simple. By arranging his wants in a scale in accordance with their intensities, he could determine the comparative values of the corresponding goods. He would not be able to gage exactly the importance of the different goods, but he would be able to judge as to their relative importance. Thus if good a gratified a more intense want than good b, he would regard it as more valuable than b. If the want it gratified were more intense than the wants gratified by both goods b and c, he would regard a as worth more than b and c together. Use Depends on Marginal Utility. In real life the problem for the consumer, even the isolated Value in consumer like Robinson Crusoe, is never so simple as this. Most wants require several units of the appropriate good or combination of goods to gratify them. On the other hand, many goods are capable of gratifying a number of different wants. On what principle are units of commodity valued. when a number of units are used by the same consumer? As explained in the last chapter (Section 39) when a number of units of a good are available the principle of diminishing utility comes into play. The wants to be gratified by successive units of the good may be arranged in a scale according |