Jevons Flashcards
what made up the majority of Jevons ‘the theory of political economy’?
it takes up almost half of the text
what was jevons view on economics as a science?
he was one of the first to view economics as a science. he argued that it was quantitative. it was purely mathematical in character. because economic deals with quantities it must be mathematical for example supply and demand is in terms of quantities. he claims it pointless to do economics in other ways
he claims the science is a physical or concrete deductive method. he considers that he starts from some psychological law for example greater gain is better than one. you then reason down from this law to predict a phenomena which will be produced in society with this law
what was jevons view on pleasure and pain?
he felt it was possible to discuss concepts of pleasure and pain in quantitative way. Bentham expounds his greatest happiness idea. Jevons measures intensity of pleasure against the duration. he then draws a graph showing how pleasure results over time with the total pleasure being the area under the graph. he considered pain to be the opposite of pleasure so to decrease pain is to increase pleasure. therefore you can treat pleasure and pain as positive and negative in algebra. the aim is to maximise the resulting sum of pleasure and pain in order to maximise pleasure (positive direction). this is done by accepting everything with greater pleasure then pain and avoiding everything with more pain then pleasure. this type of analysis can be carried out relating to work
what was jevons view on the theory of utility?
he defined utility as the property of a good to provide pleasure. it is not intrinsic to the good concerned but a subjective assessment by any person on the usefulness. he starts by discussing the discontinuous step diagram indicating declining pleasure from consumption of addition goods. he then modifies this to a continuous curve. as the diagrams show additions to utility from extra consumption then total utility must be area of rectangles in discontinous or the area under the curve for the continuous curve. Jevons then creates the general law which is as the quantity of any commodity increases, so the utility derived from last portion used decreases.
what was jevons view on the theory of exchange?
Jevons was interested in supply and demand viewing demand as easiest but supply as problematic. he excluded the production to simplify problem. he assumes that the goods in question are just given arbitrarily to the people in the economy . assume person 1 is given quantity a of good 1 and person 2 given quantity b of good 2. if person 1 wants good 2 then it must supply good 1 in exchange for a quantiy of good 2 (demand) and vice versa for person 2. therefore all they have to do is decide on the quantities in the swap and the exercise is finished. the quantities swapped depends on the utilities of the two people for the two two goods.
the quanties exchanged are in effect the relative price of good 1 for good 2 and there is no costs of production as there is no production. therefore price is not determined by cost of production. value is subjective and independent from the costs.
if a person with a gives up q1 of good 1 to get q2 of good 2 and vice versa then the additive utility functions are:
U = U1(a-q1)+U2(q2) for person 1
U = U1(q1) + U2(b-q2) , U* and U are not the same utility functions
from this you can show that the two parties trade until P2/P1 =q1/q2
what are the conclusions of Jevons theory of exchange?
it is not the best model of supply and demand. you can work out the relative exchange and the relative prices but you cant work out supply as there is no production. however it is a nice theory. one issue with Jevons work is he frequently misses of prices for many of his equations. he doesn’t mention the costs of production so can it be a good theory of price. he does not give us enough information on the initial endowment
what was jevons view on the theory of labour?
the curve pq represents the utility of the product. the curve abcd represents the painfulness of the effort. rational agents will expend work effort so as to maximise utility. the height of points in the diagram above the line Ox denotes pleasure and depths below pain. he assumes that originally as you increase effort, you may receive pleasure from working harder however after a certain point this will lead to pain again (joints may become sore). there will arise some point where the net pleasure is maximised such that qm=dm so pleasure gained is exactly equal to the labour endured. this is the point where the labourer will cease to work any more as it will be inconsistent with human nature to work when the pain exceeds rewards.
what was jevons theory of labour when there was only one good?
one key issue was how much labour to supply. he assumes that an individual can produce output with personal labour as the only input so q = f(L). utility derived from consumption of good is U=U(q) . pain from production is function P=P(L). the job then is to maximise the U(q) +P(L) .
the issue with this again is that there was no production costs involved so is it sensible to have a production function with labour as the only input. the classics would never conceive of getting inputs without capital or land inputs. does the person receive all the output so wages exhaust the whole product.
what was jevons theory of labour when there was only two goods?
this is jevons extension of the one good economy. he states there are two production functions of the kind qn = fn(Ln) and two utility functions U1=U1(q1) and U2=U2(q2). the amount of labour the trader supplies is L=L1+L2, there are two pain functions P1=P1(L1) and P2=P2(L2). jevons then tries to identify the optimal mix of the two goods to produce however unfortunately he appears to assume the pain functions as identical ( not realistic - cave mining and secretary do not have same pain function ). there does appear to be more unknowns then equations so equations are not solvable (Jevons notation is poor with leaving out prices)
what was jevons theory of rent and capital/
when jevons attempts to explain the distribution of income, his theory of utility and disutility seem to disappear. it was his least finished work.
he assumes rent to equal = q - L(dq/dL) so rent appears to be surplus after wages have been paid
for capital he changes output as a function of variable time instead of labour and assumes output increases with time. this logic would appear to say that if we spend the same amount of labour catching fish then the product of this same amount of labour will increase if we leave the fish on the quayside.
what are the conclusions on Jevon?
it has been pointed out the literature that makes up the four sections of Jevons work is not unified. the theory of exchange there is no production at all therefore labour, land and capital do not appear nor do wages rents and profits. in the theory of labour, land and capital do not appear so all output would appear to be wages. in the theory of rent, capital does not appear, land is a fixed quantity and output is divided into rent and wages
in the theory of capital, land does not appear. a fixes quantity of labour is worked so labour does not appear as a variable input. once the labour is worked, the output simply increases as a function of time
