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This paper has evaluated the empirical usefulness of six different monetary aggregates for the period 1953-I through 1971-I and the two sub periods 1953-I through 1960-IV and 1961-I through 1971-I. When alternative adjustments are made for the disturbance created by the major industrial strikes of this period, it is found that changes in the narrow money stock have a greater capacity to explain movements in two different measures of income than either changes in bank credit or four broader definitions of money. Moreover, results from estimates of two alternative reduced form systems, in which changes in income are determined by changes in two monetary variables and man-days idled by strikes, also confirm that the narrow money stock was the most empirically useful monetary aggregate from 1953-I through 1971-I. [ABSTRACT FROM AUTHOR]

This section presents several comments about a paper by Edward Gramlich published in this same issue of Brookings Papers on Economic Activity, which develops systematic and comprehensive estimates of who bears the burden of an increase in national unemployment in the U.S. as of June 1974. According to the first commenter, the paper by Gramlich represents a useful attempt to study in some depth the differential effect on family income of cyclical changes in the level of unemployment. The findings are interesting and important. In general they confirm what other, less intensive, studies have led us to expect. But the cross-section data used permit detailed analysis that is not possible in more aggregative time-series studies. The author has been ingenious in developing his relationships one step at a time and in using the variables in his regression equations. The first commenter found quite useful the analysis of transfer payments in the final part of the paper. And he particularly appreciated Gramlich's careful treatment of unemployment insurance, which provides an antidote to some of the more sweeping claims regarding the disincentive effects of this form of transfer income. Meanwhile, the second commenter says that Gramlich has written a good straightforward paper.

In a recent study, we examined in depth the effects of moving from fixed to competitive commissions upon NYSE member firms, investors, market efficiency, and the economy. That study found no persuasive reason to maintain the current fixed rates. The purpose of this paper is to present some of the more important empirical analyses of our study with particular reference to those results which are based upon the income and expense statements of individual NYSE firms for each of the years 1965-1970. The Securities and Exchange Commission allowed us to use their computer to perform various statistical analyses of these statements. This is the first time that any outside researchers have been given access to these files. The empirical results summarized in this current paper therefore should prove most interesting to students of financial markets. To provide an initial perspective, the paper begins with an overview of the brokerage industry and a discussion of the more important economic arguments for and against competitive commissions. Following this, cost and profit functions for individual brokerage firms are developed using two different approaches. An analysis of the major ways in which competitive commissions might affect market efficiency is then presented, again with some new statistical results. A brief conclusion ends the paper. [ABSTRACT FROM AUTHOR]

In this paper the expected utility hypothesis of choice under uncertainty, developed by Daniel Bernoulli and popularized by Friedman and Savage, is applied to the explanation of the optimal amount of life insurance for a rational individual. The empirical implications of the expected utility hypothesis for the demand for life insurance are then tested by multiple regression analysis using data for the decade of the 1960s. The theoretical model developed implies that three key cyclical variables should explain cyclical variations in the quantity of life insurance demanded: the rate of discount, the amount of nonproperty income (i.e., wages and salaries) expected to be received over the period of analysis, and the amount of nonhuman wealth held at the time the decision to purchase insurance is made. Our empirical results confirm the importance of these variables and are consistent with behavior according to the expected utility hypothesis. [ABSTRACT FROM AUTHOR]

Our paper studies empirical relationships between money demand on the one hand and income and the rate of interest on the other for the United States in the post-war period, 1947-1966. Much already has been learned about the statistical properties of money demand chiefly through the pioneering work of A. J. Brown, Tobin, Latane, Friedman and Bronfenbrenner-Mayer and the more recent important studies of Christ, Meltzer, Brunner-Meltzer, Lee, Teigen, Laidler, Chow and Zarembka. But much also remains in question. Our aim is to throw light on some of the unsettled issues. [ABSTRACT FROM AUTHOR]

A conference paper discussing the cost of the Marshall Plan to the U.S. is presented. The author notes the estimates given by the Committee on European Economic Cooperation (CEEC) for the Economic Recovery Program, which claim that the cost to the U.S. would be $22.4 billion. The author expresses concern that this estimate may be low. The author considers income and payments for European recovery, the Marshall Plan and inflation, inflation and commodity markets, and U.S. budgetary problems.

The article presents critical discussion of two papers by George Garvy and Edward F. Denison on the distribution of national income. According to the author Garvy has expressed some doubt as to the existence of a long-term trend of diminishing income inequality. Both manners have also stressed the very crucial choice of income definitions and the basic family unit used in measuring inequality statistically. Garvy has also suggested an interesting change in the income unit used to measure inequality. The usual per capita income measure may be useful from a welfare standpoint or in relation to consumer demand. Commenting on the paper by Denison, the author says that he has identified the ordinary business sector and then, within that division, distinguished several farm and non-farm ownership forms and property income sources. At the end of his paper, Denison introduced the government as tax collector and payer of transfer incomes. The author applaud his remarks on the effect of taxes and transfers and regret that the scope of his paper could not have been somehow extended to include more discussion of income redistribution.

The article comments on economist Alan Freiden's paper related to the marriage market in the U.S. Freiden has been reasonably faithful to economist Gary Stanley Becker's marriage model in his attempt to estimate the reduced-form equation explaining variation in the proportion of females married. His observational units are regional subaggregates in cross-section data. Thus, the Freiden paper represents a commendable attempt to evaluate the usefulness of the model. The major problem arising in going to the data is in translating and measuring full income. Full income is a precise concept in the theory but is made up of two main components, one of which is ambiguous in its effect upon marriage. The existence of marriage predates progressive income tax and joint returns. Nevertheless, levels of marriage incidence in modern society should depend on tax structure. Divorce costs probably vary directly with the number of immature children, thus, the index used by Freiden is not so appropriate for his higher-age groups. The notion that the "likelihood" of marriage increases the greater the difference in joint and individual household production is appealing but somewhat lacking in rigor.

This paper develops systematic and comprehensive estimates of who bears the burden of an increase in national unemployment in the U.S. as of June 1974. Using detailed information on about 2,600 families who, during 1967-1972, participated regularly in a panel conducted by the Survey Research Center of the University of Michigan, Michigan, the paper traces the effects of an economic slump on family incomes along four routes: first, the direct impact resulting from more unemployment of the chief breadwinner of the family; second, the added burden from shorter working hours by the family head; third, the loss in earnings of secondary workers; and fourth, the cushioning of family income provided by transfer payments, such as unemployment insurance and welfare. The author's estimates do not encompass the adverse effects of a slump on the quality of jobs, nor do they assess the cushioning effect of lower income tax bills for the victims. In appraising the direct unemployment effect, the author uses his large sample to estimate the influence of various personal characteristics of the head of the family on his or her vulnerability to unemployment. The author demonstrates, a recession imposes a very regressive tax on the incomes of poor families headed by males, with an extra levy on African Americans.

This article examines the effects of inflation and of transitory changes in income on consumer saving and spending behavior in the United States. To judge from the recent pronouncements of the forecasting fraternity, uncertainty about the behavior of consumers is at the heart of differences in view about macroeconomic policy at the present time. The inability of the economic recovery to gather sufficient force to bite into unemployment rates has been widely attributed to continued hesitancy and caution of consumers as reflected in exceptionally high ratios of personal saving to disposable income. And differences of opinion about the probable vigor or sluggishness of the recovery are due in considerable part to differences in judgments about the probable consumer response to the unfolding economic situation. One of the major sources of uncertainty about consumer reactions concerns the way that price inflation, both expected and realized, influences consumer decisions about spending or saving. This paper attempts to mine survey measures of consumer expectations, attitudes, and plans in an effort to determine their usefulness in predicting and explaining consumer behavior. We ask two questions: First, what is the role of these anticipatory variables in models designed to forecast consumer behavior? Second, what are the economic variables underlying the movement of consumer anticipation?

The article presents discussions by economists on some papers that are published in the May 1, 1970 issue of the journal "American Economic Review." The author states that economist Robert J. Lampman's paper first presents an accounting framework for analyzing the processes of extra market redistribution in the U.S. and then goes on to discuss some current income maintenance reform proposals. The author discusses each of those quite distinct parts of the paper in turn. According to the author, the accounting framework Lampman outlines represents an attempt to classify and measure the processes of redistribution of incomes in much the same way the national income accounts treat processes of production and the market generation of incomes. In any pioneering effort of this sort, difficult conceptual issues arise which require hard decisions and inevitably invite some disagreement as well. Among several such issues that could be raised with Lampman's approach, the author has selected two that especially interest him for discussion.

This article presents a discussion on the research paper "An Empirical Measurement of the Built-In Flexibility of the Individual Income Tax," in the U.S., by Leo Cohen, a professor at the Kansas State College, Kansas. Economists have long believed that the built-in flexibility of the individual income tax is substantial. But this expectation has not been confirmed by the data. The built-in flexibility of any tax can be regarded as the product of the built-in flexibility of the tax base and the marginal rate of tax on the change in the tax base. The built-in flexibility of the individual income tax turns out to be low for two reasons, the proportion of a rise in personal incomes that appears in the tax base is surprisingly low, on the order of 55 percent, and the marginal rate applying to a change in the tax base has never exceeded 31 percent at 1953 rates and 28 percent at present rates, and most of the time it has been substantially lower. As a consequence, the maximum observed built-in flexibility of the individual income tax has been no higher than about 17 percent at 1953 rates and 15.5 percent at present rates in the U.S.

The article presents a critical discussion of the paper by Clark Kerr, Martin Bronfenbrenner and Harold M. Levinson about the effect of collective bargaining on national income. According to the author all the three papers shows that the data on national income show surprisingly little influence on the part of collective bargaining, in so far as the distributive shares are concerned. Levinson finds a tendency for labor's share to rise slightly in the industry groups which are rather well unionized, while no such rise in labor's share seems to have occurred, on the average, in certain parts of the economy wherein unionism is weak. Bronfenbrenner gives hesitant support to Levinson's conclusion that the shifts toward labor's share maybe attributed to the strength of unionism. Kerr can find no significant relationship between degree of unionization and labor's share, when industry-by-industry comparisons are made. The consistency of the employee compensation share of national income is noteworthy, considering the several influences which might be expected to alter it over the years.

The article presents the abstracts of several papers on economics published in the July 1965 issue of the "Southern Economic Journal." The first paper of the journal is "Short-Run Returns to Scale and the Production of Services," by W. David Maxwell. The second paper "The Association of Income and Education for Males by Region, Race, and Age," by Roy L. Lassiter, employs correlation and regression techniques and data from the 1960 Census of Population to analyze the relationship between income and education for males in South and non-south areas of the United States by race and age. The third paper "The Cyclical Behavior of Consumers' Income and Spending: 1921-1961," by Saul H. Hymans, focuses on personal consumption in an attempt to judge whether any environmental or behavioral changes which may have occurred in the past four decades in U.S. economy have acted to reduce the cyclical sensitivity of important component of gross national product. The fifth paper of the journal "On Liquidity and Transaction Costs," by H. Laurence Miller, attempts to clarify the concept of liquidity while investigating the relationship between liquidity and transaction costs.

As our provisions for economic security expand to cover more risks and more people, the American social security "system" grows increasingly complex. Much has been written on the relationships — actual and theoretical — between public and private pension programs, but only scanty information is available on the relationships between private health, welfare, and pension plans and our oldest social security program, workmen's compensation insurance. There are good reasons for this lack of information. Workmen's compensation has well-developed traditions of separatism. It functions under the aegis and direction of insurance companies, physicians, and attorneys. Until recently, compensation issues have received limited consideration from economists, political scientists, and industrial relations specialists. This paper, therefore, proposes to do two things: (1) It will describe and analyze some of the private plan provisions which are supplementing, duplicating, or perhaps undercutting state workmen's compensation plans and benefits. (2) It will discuss the implications these private provisions may have for the future of workmen's compensation. [ABSTRACT FROM AUTHOR]

The paper focuses on the high value of human time. It deals with two widely different population equilibrium concepts. It extends the explanation of the secular increases in the value of human time. It takes a critical look at the usefulness of the household model in analyzing fertility in countries characterized by high birth and death rates and by substantial increases in national income in a context where the level of the economic value of human time is very low and not increasing much. The idea of a population equilibrium is viewed strictly as an analytical concept to guide economic thinking in deriving testable propositions pertaining to fertility. Two very different concepts of a population equilibrium are formulated. The first concept, as it was envisaged by the early English economists, has long been a standard part of economics. It assumes that the supply of land is fixed and that diminishing returns gradually increase the price of food as a consequence of population growth. The foundation of the second concept is the high price of human time relative to the price of the services of material factors and goods.

This paper has discussed possible mechanisms for achieving ex ante and ex post equality of political income. While any of the structural reforms could be implemented separately, it makes the most sense to combine, them. Indeed, the "equal-stake" criterion is to some extent a necessary condition for the implementation of a redistributive vote tax. A voter's winning percentage on an issue set cannot be regarded as an index of his political income unless each vote has an equal value ex ante to all voters. The idea of the state arising from a "social contract" formed by all citizens to achieve collective ends can imply the concepts of both ex ante and ex post political income equality. Of the two, only ex ante equality has received attention in the literature. Yet, to those who embrace the equalitarian ethic, the ex post equality of political income should be of even greater importance than ex ante equality of voting rights. This paper argues that the attainment of ex post equality of the political income distribution is conceptually plausible and quantitatively important. Further, a policy of vote taxation does not appear to be subject to as serious disincentive effects as taxation to obtain complete equality of ex post private economic income. This follows by analogy to elasticity conditions where voting takes very little time as opposed to the length of the work week, for example, and attempts to equalize realized private income. There do not appear to be any functional equivalents under present democratic systems to achieve ex post equality of political income. Indeed, taking the United States as an example of a two-party, geographic-based democratic system, one could argue that there are perverse mechanisms, such as monopolistic systems of committee power and the like, which tend to lead to greater inequality of realized utility for many voters. Many voters from lower income-education classes do not vote under the present system, which, although it does not... [ABSTRACT FROM AUTHOR]

This article comments on a paper by William Poole about the wage-price policy of the U.S. in 1971. Poole offered a model of incomes policy that is like balancing an egg. Finding a middle approach for policy that works is like trying to stand the egg on its head: It is clearly unstable and cannot be done. Poole fears that a policy that is enforceable only against large firms and unions would find controlled firms unable to meet the demand for some of its products. In this situation, he sees customers forced to switch their purchases to uncontrolled firms, and this development leading either to broader controls or to their complete abandonment. Under the incomes policy, prices is expected generally to be governed by costs and so to present no special problem. For the areas where market power is great, a price-wage board would monitor price movements. While excessive price increases in oligopolistic sectors are not the main cause of the inflation, there are reasons to guard against them: First it is important to demonstrate an evenhanded treatment of wages and prices under the incomes policy; second, we want to ensure a prompt pass-through of cost moderation into prices; third, we want to avoid the occasional instance in which administered pricing might contribute independently to inflation. The biggest problems would come from a few sectors in which classical market power is not the issue but in which prices have been rising in ordinately for special reasons. If allowed to continue, these increases would make cooperation under the incomes policy in other sectors more difficult.

This article presents a discussion on the research paper "Economics by Admonition," by Ben W. Lewis, a professor at Oberlin College, Ohio, published in the May 1959 issue of the journal "American Public Review." Lewis maintains that bigness which now characterizes U.S. industry, together with corresponding changes which have taken place in other economic institutions, represents a fundamental change in the character of the American economic system. It is difficult to survey the process of industry-wide wage and price determination in the steel industry, for example, during the last couple of decades and find any close approximation to the old-style competitive model. At the same time, the older forms of competition have persisted with the emergence of new forms of competition. The term competition is, however, so broad that quite opposite elements and developments can be brought under it. Some of the manifestations of competition are precisely those which reflect bigness and a change in the character of the system.

A regional development program will suggest different things to different individuals, and to all it is likely to suggest not a single program but a number of related programs focusing on a common objective. To a staff member of a development agency, a regional development program implies literally scores of individual programs ranging from those involving engineering projects to those basically educational in nature carried out co-operatively with educational and other regional institutions. Since these programs are neither comparable nor amenable to uniform methods of analysis, a complete discussion of criteria for their evaluation cannot be attempted in a paper such as this. Regional development purposes will be defined as a process resulting in a secular growth of regional output or real income. This, of course, is less than a comprehensive definition of regional development as many intangible aspects of development are not susceptible of measurement by a monetary yardstick. This growth can occur autonomously. It may be influenced also by the impact of national economic expansion imparted through the private sector of the economy. A regional development program, therefore, must be distinguished as an influence exogenous to the normal functioning of the private economy. For the purpose of this discussion, a regional development program will be defined as a public undertaking, most likely a governmental undertaking, one of whose primary objectives is to influence the underlying factors affecting regional output.

The article focuses on the author's views on the proportion of net capital formation which includes net additions to construction, producers' durable equipment, inventories and claims against foreign countries to national income or net national product, for totals in current prices, about 13 percent for 1869-1928. If one includes the following decades of depression, war and the few postwar years through 1948, the average drops to about 12 percent. For totals in 1929 prices, percentages are 14 for 1869-1928 and 12 for 1869-1948. In groping for an answer to the question for the economy in peacetime, my first attempt was to link it with the technologically determined ratio of capital to output and with the rate of growth in the latter. Conclusions of the discussion in the paper should be viewed as fortified suggestions rather than fully tested inferences, largely because questions raised and particularly answers advanced ramify into wide realms of the economic and social system of the country. In its growth since the 1870's. In a sense, therefore, this paper is an interim report and its conclusions are necessarily subject to amplification and partial revision.

This paper presents the results of an intensive field investigation to determine whether farm operators who were sought as sources of farm information in a northeast Missouri farming community possessed characteristics which distinguished them from other farm operators in the community. Analysis of the data revealed that those who were most frequently sought as sources did possess such characteristics and that many of these characteristics were functionally related to the diffusion and use of farm information. An answer to the question whether local influentials possess the same leadership qualities under other cultural conditions known to exist in rural society must await further research. [ABSTRACT FROM AUTHOR]

Presents information related to several articles related to economics and statistics. Statistical discrepancies in the Great Britain national income estimates; Issues related to postal finance in the United States; Problems of time-stream evaluation.

This article comments on a study entitled The Decline in the Relative Income of Negro Men, which investigated the trend in the relative income of African American men from 1948-1964. The purpose of the present paper is to investigate two of the propositions in the study regarding the trend in the income ratio of the employees. First, the hypothesis that fluctuations in aggregate demand affect the income ratio of African American male workers is analyzed. Second, a trend in relative income from 1948 to 1964 is sought in order to verify the conclusion in the study that the 1950s were characterized by a decline in the African American and U.S. employees income ratio. Thus, the values of the income ratio of the employees from 1939 to 1964 are recorded. Assuming that the 1939 value accurately reflects the relative income of African American workers in the pre-World War II period, there appears to be a dramatic increase since that time. Hence, the analysis of the study suggests that the secular increase in the income ratio represents a decline in discrimination against African American workers. However, this decline may merely reflect the migration of the workers from the South to the less discriminating North rather than a decline in the U.S. propensity to discriminate.

Empirical estimates of marginal tax rates have frequently been made in the U.S., but much less commonly in Great Britain. The need for such information would seem to be just as great and so it may be the complications of British tax arrangements, the form in which the British data are presented or the relatively greater frequency of tax rate changes in that country which have deterred investigators in the past. This paper presents the first results of some investigations into the marginal rate of personal income tax, including surtax. It is hoped to follow up these results with those for other taxes at a later date, but personal income tax is a sufficiently important element in the Great Britain's tax structure for the conclusions to stand on their own. The method is to make estimates of marginal tax rates on the basis of time series and to check these by their predictive power. Subsequently cross-section data are analyzed and the possibilities of using the U.S. methods with the data of Great Britain or of using quarterly data are explored.

The hypothesis, advanced by Dunlop, Garbarino, and others, that interindustry differences in output per man-hour may be significant in explaining observed differences among industries in levels of average hourly earnings is subjected to further statistical exploration in this article. [ABSTRACT FROM AUTHOR]

This article estimate the rate of growth in personal income in the U.S. using a series of cross-sections in a single regression. Personal nonproperty income are viewed as returns to the quantity of human capital. In this paper, the author uses a time-series observation in estimating the rate of growth in earnings simultaneously with the rate of return and the quantity of on-the-job training. Analysis of the author show that in time-series observation the correction for finite life makes no significant impact on parameter estimates.

The objective of this paper is to present income and expenditure accounts, accumulation accounts, and the asset side of the wealth accounts for the U.S. private national economy in current and constant prices. These accounts are integrated with the production and factor outlay accounts for the U.S. private domestic economy in current and constant prices given in our earlier papers. Taken together, these accounts constitute a complete accounting system in current and constant prices for the private sector of the U.S. economy. Our complete accounting system incorporates a new concept of the standard of living, defined as the ratio of the quantity index of gross private national expenditures to the quantity index of gross private national consumer receipts. Our concept of the standard of living is similar but not identical to our concept of total factor productivity. Changes in the private standard of living reflect both changes in total factor productivity and changes in the proportion of the total product consumed in the public sector. [ABSTRACT FROM AUTHOR]

The article comments on the impact of colleges and universities on local rental housing markets in the U.S. The study consists of the development and testing of a model of rental housing service demand. In this model, demand is assumed to vary positively with income, the percentage of total population which is enrolled in a college or university, and population density. A negative relationship is assumed between demand and the percentage of total employment which is in manufacturing. The first relationship defines a positive income elasticity of demand for rental housing services. The manufacturing variable is assumed to measure the effects of such external diseconomies of spatially concentrated industry as air pollution, ugliness, and noise. The population density variable is included to reflect the influence of differing numbers of rental housing service buyers in a given market area. It is believed that the college and university variable expresses the impact of this unmeasured component of student income which tends to increase student demand relative to non-student demand. Unmeasured student income consists of transfers from outside the local housing market area and relatively high permanent income.

This paper compares the average wage levels and employment structure between regions in a free trade precedent in the U.S. The strategy of comparing wage levels and employment structure has become a popular and useful tool for analyzing a variety of inter-regional problems. The paper also suggests that a substantial improvement in employee salary and employment in the country is feasible. The pattern of wage rates in each state is measured in turn by the structure of employment in each U.S. state.