ABSTRACT OF PAPER
Title: The Introduction of the Utility Based Empirical Demand Analysis
Author: Kaergaard Niels
The Marginal Utility Theory was developed during the last quarter of the 19th century. At almost the same time empirical investigations really began on the budgets of especially the wage earners. A number of investigations of the consumption of different income groups were published during the last part of the 19th century. So, at the beginning of our century both theory and the data were available for the utility based empirical demand systems of the type which has been used during the last 50 years (Richard Stone’s linear expenditure system, Almost Ideal Demand Systems etc.). The most famous pioneer work within this area is Arthur C. Pigou’s note from Economic Journal (1910) but also Ragnar Frisch has contributed with a number of works from the late 1920s. This paper draws attention to a book by the Danish economist, Edward Ph. Mackeprang from 1902 which ought to enter into the series of pioneer works. Mackeprang’s book, “Forbruget — økonomisk-statistiske skitser” (Consumption — an Economic-Statistical Sketch) is a small book of totally 78 pages. In the last chapter Mackeprang attempts to estimate the utility function, using the budgets of 8544 families (an investigation conducted by U.S. Department of Labour). If we compare Mackeprang’s work with the two others’ we find many similarities. They all try to combine the marginal utility theory with empirical data and they all work with an additive utility function which is assumed to be identical for all consumers. Mackeprang and Frisch have related purposes, namely to examine the marginal utility theory and the parameter in the utility function, but they make use of different data. Frisch used time series for a single commodity, Mackeprang uses budget data for a given period. Mackeprang’s and Pigou’s data are similar, but Pigou has another purpose, namely to find a short cut to the price elasticities. With knowledge of the present time all the investigations contain doubtful assumption, but they all find a place among those who were forerunners for the modern empirical demand analysis. Pigou and Frisch have received recognition for their contribution. Mackeprang deserves that, too
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