84 BELL SYSTEM TECHNICAL JOURNAL 



is not easy, when making comparisons, to make proper allowances for 

 differences in rent levels and in the schedule of rent classes. In the 

 following pages there is discussed a method of charting by which 

 rent distributions may be readily compared, and their spread or 

 dispersion determined. 



The Relation Between Rents and Incomes 



Rents as a Market Index. The relation between rents and incomes 

 is concerned with the use of rental values both as an index of tele- 

 phone market in a given city, and in comparing the markets in differ- 

 ent cities. In what follows it is not always possible to separate these 

 two views, but the distinction should be borne in mind by the reader. 



The goal of an analysis of residence telephone market is to determine 

 the future sales possibilities. In theory either incomes or rents may 

 be considered as an index of the telephone market. The market 

 index adopted in commercial surveys is the rental of dwellings. 

 This may be considered either as a direct measure of the ability 

 and desire of families to subscribe to telephone service, or as an 

 indirect index, if incomes are considered the real measure of the 

 market. If the first viewpoint is accepted, it may be logically con- 

 cluded, although not proved, that rents are a better index of tele- 

 phone market than are incomes. Incomes, as measured in money, 

 are the nearest approach which may be made to a measure of the 

 position of families on an imaginary scale of economic welfare. An 

 attempt to translate rent data to an income basis, as a working 

 method in commercial surveys would introduce errors with no com- 

 pensating advantage, but a translation of this kind is more or less 

 unconsciously made in making comparisons. 



Sources of Information. Much of the literature on the question of 

 house rents versus incomes is generalization based on limited or 

 antiquated data. Such careless statements as "rent approximates 

 about one-third of the average worker's income," may be found in 

 the literature of the subject. Adam Smith, the father of Political 

 Economy, "made the assertion, surprising to us in these days, that 

 the proportion of income spent in house rent is highest among the 

 rich." Frederick Engels concluded in 1857 that rent was 12 per 

 cent and heat and light 5 per cent of the workingman's expenditure, 

 regardless of the amount of his income. 



Investigation of budgets in recent years has been confined almost 

 entirely to the field of the wage earning class. The first really com- 

 prehensive study was made by the United States Bureau of Labor 



