## Chicago. Theory and Measurement of Demand. Henry Schultz, 1934

*The undated reading list and bibliography for Henry Schultz’s advanced course “Theory and Measurement of Demand” transcribed below, included in Milton Friedman’s papers at the Hoover Institution Archives, are almost certainly from the Autumn quarter, 1934. This was the academic year that Friedman worked as Henry Schultz’s research assistant at the University of Chicago and audited the course.*

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## Friedman audited the Schultz course, Theory and Measurement of Demand

*According to the draft of his Civil Service application Milton Friedman worked as personal assistant to Henry Schultz October 1934-August 1935 at a yearly salary of $1600. In his list of courses on a separate page, Friedman writes that he “visited”, i.e. did not take for credit, a course in the Theory of Demand given by Henry Schultz during the academic year 1934-35.*

**Source: **Milton Friedman Papers, Hoover Institution Archives, Box 5, Folder 4 (Employment records, Civil Service Commission).

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## Friedman describes his work for Schultz

*From a carbon-copy, presumably an attachment to the same Civil Service application in Box 5, Folder 4, Friedman writes:*

“I lived in Chicago, Ill. from September, 1934 to August, 1935 while employed by the University of Chicago.

My educational training and experience gained while working with Professor Schultz this past year are most relevant to the position for which I am applying. I have aided Prof. Schultz on the theoretical questions underlying his forthcoming book on “The Theory and Measurement of Demand”, a subject intimately connected with consumption. In this connection I have had to survey the literature on demand and consumption. In addition to the theoretical work I have been in charge of related statistical studies and was largely responsible for the planning and direction of a statistical study of the demand for meats in the United States, on which study three statistical assistants were employed. In the course of the study I wrote several memoranda analyzing and interpreting the data and results. The results of the analysis are being published by Prof. Schultz in…[next page missing].”

**Source: **Milton Friedman Papers, Hoover Institution Archives, Box 5, Folder 11(Student years).

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## [**Course Description]**** **

**The Theory and Measurement of Demand.—**A course covering such topics as the pure theory of demand; demand and utility in the theory of exchange; static and dynamic demand functions; different notions of elasticity of demand; various methods of deriving demand functions from family budget data and from time series of consumption and prices; etc. Prerequisite: Economics 301, a reading knowledge of French, and consent of the instructor. C.—2Cs., Autumn, 9:00, SCHULTZ.

**Source:** University of Chicago. *Announcements: The College and The Divisons for the Sessions of 1934-35*, pp. 286-7.

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__REFERENCES FOR ECONOMICS 405__

## Theory and Measurement of Demand

by

Henry Schultz

University of Chicago

____

### I.__ General Equilibrium__

Bowley, A. L. | Mathematical Groundwork of Economics |

Divisia, Francois | Économique Rationelle |

Evans, G. C. | Mathematical Introduction to Economics |

Fisher, Irving | Mathematical Investigations in the Theory of Value and Price,–in Transactions of the Connecticut Academy of Arts and Sciences (9-10) pp. 1-125. |

Marshall, Alfred | Principles of Economics |

Pareto, Vilfredo | +Manuel d’Économie Politique (especially Chap. III and Mathematical Appendix, pp. 539-594.)
+Cours d’Économie Politique (especially first 73 pages) +Économie Mathématique, in |

Pietri-Tonelli, Alfonso | Traité d’Économie Politique |

Walras, Leon | +Éléments d’Économie Politique |

Zawadzki, Wl. | Les Mathématiques Appliquées à l’Économie Politique |

### II. Utility__ Theory__

### A. Philosophical__ and Historical Background__

Bentham, Jeremy | Principles of Morals and Legislation |

Edgeworth, F. Y. | Mathematical Psychics |

Halevy, Elie | La Formation du Radicalisme Philosophique (French or English edition) |

Jevons, W. Stanley | Theory of Political Economy |

Mitchell, Wesley C. | “Bentham and the Felicific Calculus”, Political Science Quarterly, Vol. XXXIII, No. 2, June, 1918. |

Stephen, Leslie | The Utilitarians |

### B. Analytical__ and Statistical__

Allen, R. G. D. | “The Foundations of a Mathematical Theory of Exchange”, Economica, May, 1932.
+”The Nature of Indifference Curves”, +”A Comparison between Different Definitions of Complementary and Competitive Goods”, |

Allen, R.G.D., and Hicks, J.R. | “A reconsideration of the Theory of Value”, Economica, Part I, Feb., 1934, pp. 52-76. Part II, May, 1934, pp. 196-219. |

Evans, G. C. | “The Role of Hypothesis in Economic Theory”, Science, Vol. 75, No. 1943, March 25, 1932, pp. 321-324. |

Johnson, W.E. | “The Pure Theory of Utility Curves”, Economic Journal, Vol. XXIII, No. 92, Dec., 1913, pp. 483-513. |

Lange, Oscar | “The Determinateness of the Utility Function”, The Review of Economic Studies, Vol. I, No. 3, pp. 218-226. |

Schultz, Henry | Review of Evans’ Mathematical Introduction in Journal of the American Statistical Association, Vol. XXVI, No. 176, Dec., 1931, pp. 484-91.
+”Interrelations of Demand”, |

Thurstone, L. L. | “The Indifference Function”, The Journal of Social Psychology, Vol. II, No. 2, May, 1931, pp. 139-67. |

Zotoff, A. W. | “Notes on the Mathematical Theory of Production”, Economic Journal, Vol. XXXIII, 1923, pp. 115-121. |

### C. Applications

Allen, R. G. D. | “On the Marginal Utility of Money and Its Applications”, Economica, May, 1933. |

Fisher, Irving | “A Statistical Method for Measuring ‘Marginal Utility’ and Testing the Justice of a Progressive Income Tax”, in Economic Essays Contributed in Honor of John Bates Clark. |

Frisch, Ragnar | “Sur un Problème d’Économie Pure”, Norsk Matamatisk Forenings Skriften, 1926, Series 1, No. 16.
New Methods of Measuring Marginal Utility |

Schultz, Henry | “Frisch on the Measurement of Utility”, Journal of Political Economy, XLI, Feb., 1933, pp. 95-117. |

+ __Of special importance__

________________________________

[*Handwritten: *Milton Friedman]

__REFERENCES FOR ECONOMICS 405__

Bibliography on Demand

### __

### Henry Schultz

University of Chicago

### ____

### Derivation of Demand Curves

I. From__ Price [and] Quantity Data__

### A. The Moore Method

Moore, H.L. | Economic Cycles: Their Law and Cause. New York, 1914.
Forecasting Yield and Price of Cotton. New York, 1917. “Empirical Laws of Demand and Supply and the Flexibility of Prices”, PSQ, XXXIV, 1919. “Elasticity of Demand and Flexibility of Prices”, JASA, XVIII, 1922. “A Moving Equilibrium of Demand and Supply”, QJE, XXXIX, 1925. “Partial Elasticity of Demand”, QJE, XL, 1926. “A Theory of Economic Oscillations”, QJE, XLI, 1926. Synthetic Economics, New York, 1929. |

Schultz, Henry | Statistical Laws of Demand and Supply, with Special Application to Sugar. Chicago, 1928.
Meaning of Statistical Demand Curves. English original of Der Sinn der Statistischen Nachfragekurven, Veroeffentlichungen der Frankfurter Gesellschaft fuer Konjunkturforschung, Heft 10. Bonn, 1930. “The Shifting Demand for Selected Agricultural Commodities, 1875-1929”, “A Comparison of Elasticities of Demand Obtained by Different Methods”, “Interrelations of Demand”, JPE, XLI, 1933, 468-512. |

Lenoir, Marcel | Études sur la Formation et le Mouvement des Prix. Paris, 1913. |

Ezekiel, Mordecai | “Statistical Analysis of the Laws of Price”, QJE, 1928.
“A Statistical Examination of Lamb Prices”, JPE, April, 1927. |

### B. The Leontief Method

Leontief, Wassily | “Ein Versuch zur Statistischen Analyse von Angebot und Nachfrage”, Weltwirtschaftliches Archiv, Band XXX, Heft 1, 1929, pp. 1-53. |

Schultz, Henry | Meaning of Statistical Demand Curves, Appendix II, 99-118. |

Frisch, Ragnar | “Pitfalls in the Statistical Construction of Demand and Supply Curves”, Veroeffentlichungen der Frankfurter Gesellschaft fuer Konjunkturforschung, Neue Folge, Heft 5, Leipzig, 1933. |

Leontief, Wassily | “Pitfalls in the Construction of Demand and Supply Curves: A Reply”, QJE, XLVIII, 1934, 352-63. |

Frisch, Ragnar | “More Pitfalls in Demand and Supply Analysis: A Reply”, QJE, XLVIII, 1934, 749-55. |

Leontief, Wassily | “More Pitfalls in Demand and Supply Analysis: A Final Word”, QJE, XLVIII, 1934, 755-59. |

Marschak, J. | “More Pitfalls in Demand and Supply Analysis: Some Comments”, QJE, XLVIII, 1934, 759-67. |

### C. The (second) Pigou Method

Pigou, A.C. | “The Statistical Derivation of Demand Curves”, EJ, XL, 1930, 344-400; reprinted in A.C. Pigou and D.H. Robertson, Economic Essays and Addresses. London, 1931. |

Ferger, Wirth F. | “Pigou’s Method of Deriving Demand Curves”, EJ, XLII, 1932, 17-26. |

Cassels, J.M. | “A Critical Consideration of Professor Pigou’s Method for Deriving Demand Curves”, EJ, XLIII, 1933, 574-87. |

Allen, R.G.D. | “A Critical Examination of Professor Pigou’s Method of Deriving Demand Elasticity”, Econometrica, II, July, 1934, 249-58. |

### D. Miscellaneous

Working, Holbrook | “The Statistical Determination of Demand Curves”, QJE, XXXIX, 1925. |

Working, E.J. | “What do Statistical Demand Curves Show?” QJE, XLI, 1927, 212-35. |

Gilboy, Elizabeth W. | “Demand Curves in Theory and Practice”, QJE, XLV, 1930.
“The Leontief and Schultz Methods of Deriving ‘Demand’ Curves”, QJE, XLV, 1931, 218-61. |

Ferger, Wirth F. | “The Static and Dynamic in Statistical Demand Curves”, QJE, XLVII, 1932, 36-62. |

### II. From__ Family Budget Data__

### A. The (first) Pigou Method

Pigou, A.C. | “A Method of Determining Numerical Values of Elasticity of Demand”, EJ, XX, 1910, 636-40. |

### B. The Frisch Method

Frisch, Ragnar | “Sur un Problème d’Économie Pure”, Norsk Matamatisk Forenings Skriften, 1926, Series 1, No. 16.
New Methods of Measuring Marginal Utility |

Schultz, Henry | “Frisch on the Measurement of Utility”, JPE, XLI, 1933, 95-117. |

### C. The Marschak Method

Marschak, Jakob | Elastizitaet der Nachfrage, Beitraege zur Oekonomischen Theorie, 2, Tuebingen, 1931. |

Frisch, Ragnar | “Discussion of Marschak’s Method”, Revue d’Économie Politique, XLVI, 1932, 14-28. |

### D. The Roy Method

Roy, René | La demande dans ses rapports avec la Répartition des Revenue”, Metron, VIII, 1930, 101-53.
“Les Lois de la Demande”, |

### E. Miscellaneous

Gilboy, Elizabeth W. | “Demand Curves by Personal Estimate”, QJE, 1932. |

Waugh, Albert E. | “Elasticity of Demand from Budget Studies”, QJE, 1932. |

Bean, L. H. | “The Farmer’s Response to Price”, Journal of Farm Economics, 1929.
“Measuring the Effect of Supplies on Prices of Farm Products”, |

__N.B.__

The references, with but one exception, are confined to works in English or French. For additional references see Schultz, Henry: “A Comparison…”, __Econometrica__, I, 1933, 274-308.

The abbreviations refer to the following periodicals:

EJ | Economic Journal |

JASA | Journal of the American Statistical Association |

JPE | Journal of Political Economy |

PSQ | Political Science Quarterly |

QJE | Quarterly Journal of Economics |

**Source: **The above transcription is based on the copy in Milton Friedman Papers, Hoover Institution Archives, Box 5, Folder 12 (Student years). Another copy can be found in the George Stigler Papers, University of Chicago Archives, Addenda, Box 33, Folder “1935 University of Chicago Class Notes”. The copy in the Stigler notes is almost identical to the Friedman copy (with some hand-corrected titles and additions for apparent unintended omissions). Stigler’s notes to the course along with class hand-outs are found in the same folder.

**Image Source: **The only photo of Henry Schultz that I have ever come across is the one found to accompany Harold Hotelling’s paper and Paul Douglas’ paper in *Econometrica* (1939) honoring Schultz who died November 26, 1938 in a tragic automobile accident that also took the lives of his wife and two daughters.

Interesting, an impressive reading list! But no mention of Slutsky!?

Excellent point. Just checked Chipman and Lenfant (2002) “Slutsky’s 1915 Article: How It Came to be Found and Interpreted” http://www.econ.umn.edu/~jchipman/SLUTSK19.pdf. In page 4 of this reprint, they note “First published recognition of Slutsky’s important paper in America may be found in Schultz’s 1935 article: Interrelations of Demand, Price and Income.” Stigler’s notes for the course include a handout, with the heading: “Economics 405/The Theory and Measurement of Demand/Professor Henry Schultz/University of Chicago/December, 1934” and with the title: “Summary of Relations between Demand, Prices and Income”. On the last page of the handout, Schultz writes: “The foregoing development is, with the exception of Section 5, essentially that given by Eugene Slutsky in his “Sulla teori del bilancio del consummatore”,

Giornale degli economisti, LI (1915), 1-26.” He points to the essential similarity of the equations to those derived by Hicks and Allen, then writes (underlined for emphasis): “They [the equations] are among the most important equations in the entire field of demand, although they are as yet comparatively unknown to economists.”My conclusion. The date of the handout is the end of the autumn quarter, 1934 at the University of Chicago, so Schultz was probably working this up during that quarter since the course syllabus and bibliography must have been prepared before the start of the quarter.

Schultz learned about Slutsky’s paper in Europe in 1934. Back in Chicago he commissioned a translation dated December 1934, perhaps only typed. This translation is mentioned in a letter by Friedman to Hotelling in the spring of 1935. Stigler who edited (with Boulding) the 1952 volume with a translation of Slutsky (1915) hired another translator (Olga Ragusa), although one would think he would have had knowledge from Friedman of the 1934 translation.

So I guess the mystery is who in Europe tipped Schultz to Slutsky. Schultz picked up on Konüs’ work via the Bortkiewicz review of Haberler’s Habilitationsschrift on index numbers. Recognizing the importance of Slutsky and Konüs, Schultz certainly did have a good nose for significant work.

No, he didn’t have a good enough nose for significant work. He had worked on demand since the early 1920s without finding out that Slutsky (1915) had been on the shelves in the UChicago Library all the time. He even was in letter exchange with Slutsky in the early 1930s about translating Slutsky (1927), see the editorial footnote to Slutsky’s article in Econometrica 1937, without finding out about Slutsky (1915). Schultz was very depressed in the years before he died. Possibly this was due to poor marital relations but disappointment over not discovering Slutsky may have added to it.

Henry Schultz is in in group picture from the Cowles Commission Research Conference in Colorado Springs in July 1938 along with Abba Lerner, Rene Roy, Alfred Cowles, Abraham Wald and many others.