This chapter examines some deficiencies in the present
methodology of economics. The deficiencies referred to may be summarised as follows:
1. The problems arising from the compartmentalisation
of economics into disconnected academic fields.
|| 2. Problems arising from the tendency of economists
to define the scope of economics too narrowly,
possibly thus excluding s number of important
cutural variables from their models.
|| 3. This tendency creates a further difficulty; that
one can often not be sure to whet range of cultures, historical periods, or actors' circumstances, the models are applicable.
|| 4. The over-eraphasis which economists have placed
on macro-economic statistical relationships in
'constructing forecasting models. Without a
proper investigation and understanding of these
relationships at the "micro" level, i.e. that of
individual actors, there is some danger of using
spurious relationships, end again of the problem
referred to under (3) above.
Finally, the argument calls for an integrated model of
the household's economic behaviour, taking in all three main
aspects of its economic activity (expenditure, work and
saving) which have hitherto been dealt with by economics
mainly in isolation from each other. Such a model should be
based on relationships empirically verified at the level of
the individual household. It should incorporate as variables
the norms, goals and interaction patterns of the household
end its members, from- which their economic actions arise.
Since these may be difficult to ascertain on a macroeconomic level, some demographic or economic indicators
of sociological variables which are salient for the model
must also be identified.
The second chapter reviews some recent literature relating
to the supply of labour by the household to the market.
(This chapter does not attempt to give a complete coverage
of the aspects of the field of labour economics which are
relevant to the objectives of the thesis; most of the
literature on the labour force participation of married
women is left over to chapter 6, where it is examined in
conjunction with my empirical findings on the family's labour
supply). The interdependence of the supply of, and demand
for labour, are considered as they relate to the issue of how
much work is available to the individual employee. There
follows a discussion of the determinants of the individual's
supply of labour to the market. This involves a consideration
of how the utility which the individual household member
derives from his marginal earnings is effected by the distribution of these earnings amongst personal and collective
uses. The question is then raised as to whether such
variations in the utility of marginal earnings might be used
to predict the reactions of workers to wage increases and
hence the elasticity of supply of labour to the individual
to the individual firm.
This chapter sets out the data available from existing
sociological studies about the distribution of income within
the family, end the nature of each spouse's responsibilities
within the family budgeting system.
This chapter describes the design of a small survey undertaken amongst working-class families in Edinburgh to investigate the nature of the distribution of income end budgeting
responsibilities within the family, end their relationship
to the husband's end wife's supply of labour#' The methods
used to analyse the data ere also outlined.
This chapter gives the findings of the survey on the distribution of income within the family and the nature of the
budgeting system. Factors effecting the size of the husband's
personal expenditure ere examined. Two main systems of
budgeting are identified, together with their cultural
This chapter gives the findings of the .survey on the family's
supply of labour. An overall analysis is made of the determinants of the husband's and wife's propensity to work, and
the importance of the distribution of income within the
family is assessed in relation to other factors. A summary of
the rather complex conclusions of this chapter will be found
at the end of it.
Chapter 7 concerns some implications of the savings behaviour
of families in the sample for contemporary theories of the
consumption function. The data suggest a basis for a forecasting model of consumer demand which would treat some types
of saving as commodities. A mathematical model is therefore
developed for predicting the cross-elasticities of substitution between current consumption of particular commodities, and that part of saving which is made towards
future planned purchases« The implications of this type of
substitution effect for the aggregate savings ratio ore also
This chapter develops the notion of a utility tree - that is,
a clustering of commodities according to the degree to which
they are substitutes for one another in the consumer's expenditure. A utility tree enables the economist to identify
groups of commodities, such that the demand for all
commodities in the group is effected to the same extent by a
price change of a good external to the group. Such findings
greatly simplify the work of calculating the cross-elasticities
of substitution. The typical division of expenditures between
husband and wife, identified in chapter 5, forms a logical
basis for the classification of commodities into groups between which the cross-elasticity of substitution is low.
Using this division as a basis for classification, a
hypothetical utility tree is constructed, tested on consumer
expenditure data from the National Incomes Blue Book, and
found to be reasonably correct.
Together with the work on saving in the preceding chapter,
the notion of a utility tree suggests a basis for the integrated model of household economic behaviour called for in
Chapter 1, It is then shown that leisure could be included in
the model as a commodity, given the right sort of macroeconomic data.
In conclusion, the possibilities of such an integrated mode
ere further considered. An attempt is made to assess what
data would be required to complete the model; how it incorporates the ideal types of the family budgeting system
developed in chapter 5 and the findings about the
determinants of the family's labour supply in Chapter 6;
end what further work needs to be done to find out how
generally valid are the sociological assumptions on which
the model is based. Finally, I examine the question of
what simple demographic indicators are available of the
sociological variables used in the model.