econ homework

March 07, 2008

On labor supply c. 1908

From the March 7, 1908 NYT:

MONTCLAIR, N.J. - James Reysons of West Orange, who was arrested here to-day as a mendicant , has solved, to his own satisfaction at least, the problem of economics relating to the amount of wages the individual should earn.

Reysons was arrested at 9 o'clock and immediately arraigned before Recorder Yost. Chief of Police Harry Gallagher examined him.

"How much do you earn a day begging?" he asked.

"Twenty-five cents," said Reysons.

"What had you collected when you were arrested just now?" inquired the Chief.

"Fifteen cents," responded the prisoner.

"What!" exclaimed the Chief. "You've made 15 cents at 9 o'clock and you don't get more than 10 cents the rest of the day?"

"Well," said Reysons, with a tired look, "I quit work when I get the 25 cents."

Reyson's response highlights the Chief's obvious mistake in confusing an individual's equilibrium level of begging and the revenue maximizing level of begging. The former recognizes both costs and "benefits" from begging whereas the latter recognizes only the "benefits." Most likely the two levels are different for most people, just as Reysons indicates.

The story finishes by pointing out that Reysons was discharged upon "promising to leave town in five minutes." Five minutes!?! How fast could Reysons run?

Craig Depken

divisionoflabour.com