146. F. P. Ramsey to Harrod , 9 February 1928 [a]

Howfield, Buckingham Road, Cambridge #

9 February 1928

Dear Harrod,

I think what you say is perfectly sound; i.e. on p. 130-1 paragraph 10 is nonsense, and paragraph 11 is true but a consequence of, not something additional to, the preceding analysis. [1]

The difficulty in saying my analysis covers the whole ground, is that it assumes equal marginal utility of money to everyone, which might fail not only through differences of income and situation but through differences of temperament and taste. [2] Thus one man might just mind less about everything than another, enjoy his earnings less and disenjoy his work less, and so be a much more suitable subject for taxation in spite of having same income and spending it similarly to the other; and more complicated differences of taste must be liable to have a similar effect in making the marginal utility of money different to different people. But how to allow for this I do not know. But as you point out, there is no sense in bringing in distributional effects as something extra, as Pigou does.

I think I must have read it in M.S. but with obviously insufficient attention. [3]

I will show him your letter

Yours,

Frank Ramsey

  1. 1. Refers to Pigou's A Study in Public Finance, London: Macmillan, 1928, part II, chapter IX.

    2. F. P. Ramsey, "A Contribution to the Theory of Taxation", Economic Journal XXXVII, March 1937, pp. 47-61; see in particular p. 47 for the limiting assumptions.

    3. In the September 1927 Preface to his book, Pigou thanks Ramsey for having read portions of the manuscript and having made valuable suggestions.

    1. a. ALS, two pages on one leaf, in HP IV-963-973, envelope addressed to Christ Church.


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