Principles of Evaluation I 1

§ 7. Effect of repeated stimuli.

It is in the very nature of man and his nervous organization that any stimulus to the nerves, however pleasant for a time, becomes painful when long continued or increased unduly. The trumpet too distant at first for the ear to distinguish its notes, may swell to pleas ing tones as it approaches, until at length its volume and its din may become absolutely painful. A man coming in from the winter storm and holding out his hands before the fire enjoys the warmth intensely ; a few minutes later the same heat becomes unpleasant. In winter we wish for a moderation of the temperature; on the sultry days of summer we think of a cool breeze as the most to be desired of all things. Whether the temperature rises or falls, there is a point beyond which the change no longer adds to our comfort but begins to detract from it. A man, however hungry at first, may be made miserable if forced to eat beyond his capacity. The first sup of cool water is delicious to a thirsty man ; a second and third glass, but not more, may still be grateful. Forcing one to take an excessive amount of water is one of the cruelest of tortures (sometimes called the "water cure"). Of every economic object it may be said, "One may have too much of a good thing." The statement of this relativity of desires and successive gratification, is called the principle of diminish ing § 8. Different quantities and corresponding desires. It has already been made clear that the scarcity or abundance of a good has its effect upon our desire for that good. We can make use of more or less of it, but not of an infinite amount. If a very small quantity is available, we may use that quantity and still feel a fairly intense desire for more. If the quantity available is large, our consumption may be in creased, but a desire (less intense) for more may still remain. A limit will be found somewhere, however, to the use that we can make of the good, and if this limit is reached—if the quan tity available is so great that absolutely all our desires for it 1 See note on the Weber-Fechner law, at end of chapter.

are satisfied—the value of the good will fall to zero for the reason that desire has completely ceased. Clearly the in tensity of desire changes—and changes inversely—with the quantity of the goods available. If now we may be allowed the latitude of speaking of these various intensities of desire as different desires, we may say that there is a series of de sires capable of being gratified by various quantities of the good in question. A small amount will gratify the greatest or most intense desire, an additional amount of the good will meet the desire which comes next in intensity, and so on until finally we reach the point where, with the whole series of de sires already met, an additional amount finds desire completely lacking and value therefore at the zero point.

§ 9. Stock of homogeneous units ; principle of indiffer ence. If now we consider a quantity (stock) of the good which is capable of gratifying a part, but not all, of our desires, it is plain that a value will attach to the good. If it is a stock made up of homogeneous or iden tical units, there is no reason for pre ferring any particular unit to any other.

True, in advance of using the goods, we say that some of the desires are more intense than the others. But when we begin to use a stock of homogeneous units this difference must disappear. For we will begin by applying the goods first to the more intense desires, and as we have just seen, this re • To show this graphically, let the units of goods be plotted on the base line. If but one were present its desirability measured on the per pendicular (valuation scale) or parallel with it, is indicated at the height d; if there were a second unit its desirability would be indicated by e; and so on until with six units the value of the sixth would be c. But if the units are perfectly interchangeable, the value of every unit would now be the same as that of the last, and is measured by the height of the straight line be above the base line, and not by the height of the curve ac.

duces their intensity. We then apply goods to the desire formerly ranking next in intensity. And so successively, we apply the goods to the more intense desires remaining, and as they fall in intensity we take in, one after another, the desires which at first were less intense, continuing until the whole stock of goods has been applied. In this way we bring to equality the values of all the units that are actually used (if the goods are divided into very small units). We have come to the limit, or the margin, of the series of desires that this stock of goods is capable of gratifying, and outside of this limit may remain various ungratified desires.

The marginal desire (originally the least intense of the de sires now gratified) now marks and expresses the actual value of each of the other units of the stock. This is the marginal valuation. The stock being made up of homogeneous units, equally fitted to gratify any one of the series of desires, no unit can be valued at the moment more than any other unit. The aspect of valuation here presented is called either the marginal principle (thinking of the least intense desire), or the principle of indifference (thinking of the equal fitness of the objective units), and may be expressed as follows : each unit of a stock of homogeneous goods which is actually at hand and equally convenient for use, is of equal value with every other unit, no matter to what use it is there applied. Of course this holds only as to the particular time and set of conditions, and desires may change in the next moment.

§ 10. Diagram of marginal valuation. This principle of valuation may be illustrated by the following diagram in which horizontal distance represents stocks of goods of various amounts, and perpendicular distance represents marginal valuation or value per unit. Let us assume that in the case of a stock of ten units the marginal valuation (value per unit) is 36. The value then ascribed to the whole stock will be 360 (represented on the diagram by the rectangle ab). If in stead of a stock of ten we consider a stock of fifteen, then since fifteen units will gratify more desires than ten units, leaving fewer desires still unsatisfied, the marginal valuation will be lower—for example 30 instead of 36. In this case the value of the stock is 450 (rectangle ac). And similarly, for stocks of various amounts, we get marginal and total valuations as shown in the following table: Unita of Marginal valuation in Valuation of terms of anything commodity whole amount else taken as a standard 10 36 360 15 30 450 20 25 500 30 19 570 40 16 600 60 10 600 60 5 300 The first thing of significance in the diagram is that the marginal valuation, or value per unit, is large in the case of a small stock, and small in the case of a large stock. And this means simply that when we have a small supply of a com modity we set a high value (per unit) upon it; when we have a large supply its value per unit to us is small. This, of course, is a familiar fact of daily experience.' § 11. The paradox of value. One thing more may be pointed out by way of further study of the diagram. Cor responding with any given stock—for example a stock of ten units—there is a rectangle (Fig. 5, ab) which represents graphically the total value of the stock—that is, the product 2 It is evident that the various parts of a stock of goods can be valued on the marginal principle only when it is possible to choose among the various units and to apply them to various uses in such proportions as one will. If another person controls the whole stock and compels us to choose "all or none" we may be forced to value the whole stock according to our more intense desires. This is a fact of great importance in some practical problems, such as those of monopoly.