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Section F.— ECONOMIC SCIEXCE AND STATISTICS. 

 President of the Sectiox— Professor F. Y. Edgeworth, M.A., F.S.S. 



TUUIiSDAY, SEPTEMBER 12. 

 The President delivered the following Address : — 

 Points at which Mathematical reasoning is applicable to Political Economy. 



A. — Perfect Competition — 



1. Simplest type of market. 



2. Complex system of markets ; simplified by certain abstractions. 



3. The more concrete problem of an Exchange and Distribution. 



B. — Monopoly — 



1. Transactions between a single monopolist and a competing public. 



2. Transactions between two monopolists or combinations. 



The use of these applications of Mathematics to Political Economy illus- 

 trated by comparison with — 



1. Applied mathematics generally. 



2. The mathematical theory of Statistics. * 

 Notes. 



Ax the meeting of the British Association which was held at Cambridge about a 

 quarter of a centiu-y ago, Jevons submitted to this section a ' general mathematical 

 theory of political economy,' which, as he himself records, was ' received without 

 a word of interest or belief.' I propose to consider the justice of the unfavourable 

 verdict which our predecessors appear to have passed on the mathematical method 

 introduced by Jevons. 



There is some dilliculty in discussing so abstruse a subject in this place. It is 

 as if one should discourse on the advantages of classical education on an occasion 

 on winch it might seem pedantic to cite the learned languages. I shall evade this 

 dilliculty by addressing to students some appended notes,' which, like the boy of 

 the proverb, are to be seen, not heard. 



The cardinal article of Jevons's theory is that the value in exchange of a 

 commodity measures, or corresponds to, the utility of the least useful portion of 

 that commodity. What a person pays per month or year for a sack or ton of 

 coal is not what he would be willing to give for the same rather than be without 

 fuel altogether. Rather the price is proportioned to the advantage which the 

 consumer e.xpect3 from the portion which he could best dispense with — to the 

 ' final utility,' in Jevons's happy phrase. 



I shall not be expected here to dwell on a subject which has been elucidated 

 in treatises of world-wide reputation, such as those of Professors Marshall, Sidg- 

 wick. Walker, and I would add Professor Nicholson's article on Value in the 

 ' Encyclopaedia Britannica.' Those writers seem to present what I may call the 

 econornical kernel of Jevons's theory divested of the mathematical shell iii which it 

 •was originally enclosed ; whereas my object is to consider the use of that shell : 

 whether it is to be regarded as a protection or an encumbrance. 



_ I may begin by removing an objection which the mere statement of the question 

 raises. The idea of reducing human actions to mathematical rule may present 

 itself to common sense as absurd. One is reminded of Swift's ' Laputa,' where 

 ' The appended notes are referred to by letters of the alphabet, thus : (jx). 



