Knowledge that Transforms

T HE purpose of this paper is to use estimates of likely developments on the world grain market by 1970 and 1975 to reach sensible policy conclusions with regard to United States grain trade and aid. The estimating methods employed are simple and unsophisticated, largely because of the uncertain nature of the underlying data used. Projections of supply and demand as well as estimates of price elasticities are all subject to considerable error. Use of these data introduces a good deal of uncertainty into the results derived, an uncertainty that increases with each successive calculation. Nevertheless, studies of this kind are valuable for at least two reasons. First, policy decisions have to be made and the results are likely to be improved if the relevant questions have at least been asked, even if the answers are only approximations. This is certainly true in cases like the present one where the general direction of the answers is clear. Secondly, this type of work provides a framework into which better projections and other data can be fitted;as they become available to yield more accurate results and, quite possibly, better policy decisions.

unique between levels of educational development and years of school completed. The relationship may differ from individual to individual, from country to country, and even from region to region within the United States. That is certainly a weakness of national calculations such as I made. It does not follow, however, that there are no averages of school years which are reasonably good predictors of levels of general educational development. The common practice of describing job qualifications in terms of education completed is, at least in part I believe, recognition of such an average relationship. Rather than describing my approach as circular as Ross does, I would call it partial. In calculating requirements I did not take into account the interdependence among types and levels of education and skills, either the complementarities or the substitution possibilities. I would agree with Ross that the requirements for, say, medical orderlies depend on the number of M.D.s and nurses available and the proportions in which it is decided, somehow, that they should work together. All I could claim to have done is to have estimated in some detail the situation for the United States at a certain time. I wouldn't recommend it for any other country nor would I even claim that it is an optimal situation for the United States. In this respect I might go even further than Ross and say, for example, that the . . skills, abilities, etc., required in a first-grade teacher . . . , are not similar everywhere, but depend on the educational objectives of the first grade and the educational system as a whole, the social structure, the resources available, and a lot of other things. All such factors should be taken into account when considering skill requirements for first-grade teachers or other personnel. I don't really believe in fixed proportions in the inputs of educated personnel into an economy and did not intend the percentages which I calculated to be taken as such. Partly for this reason I have refrained from making projections of future educational requirements for the United States with the percentages which I calculated. If this is done, the calculations should be made taking into account the changes which are desired and which are likely to occur. Economic criteria are not the only, nor perhaps even the most important criteria for education, but they were what I was concerned with.

F LUCTUATIONS in economic activity depend not only on variation in investment but also on variation in saving. How flexible or inflexible saving will be depends partially on previous commitments to save. The concept of saving, has been defined ' by the Survey Research Center of the University of Michigan to include life insurance premium payments,2 payments into retirement or pension funds,3 and principal payments on mortgage debt.4 Non-contractual forms of saving may be called discretionary. All of the components included in the Survey Research Center's definition have common characteristics: (1) Each hinges on a previous contract limiting the possibility of spending on consumer goods. (2) The contractual commitment is of a long-term nature. Two factors would seem to make contractual saving relatively stable: (1) the habitual response to previous decisions, and (2) the economic loss suffered by prematurely discontinuing a long-term commitment to save. The primary purpose of this study is to search for the factors influencing the level of contractual saving. Tests of significance are applied by comparing the coefficients of the selected variables in multiple regressions with their respective standard errors. Our work is different and more comprehensive than the analysis of life insurance premiums by Professors Kreinin. Lansing. and Morgan.5 We are concerned with the aggregate amount of contractual saving rather than with only one of its components. Also, the population is divided into a low-income group and la high-income group with separate analyses for each. The analysis of contractual saving is becoming increasingly important since the trend of contractual saving as a per cent of total saving is upward. In 1949, contractual saving was almost as large as total saving since discretionary dissaving largely offset positive discretionary saving. In explaining aggregate contractual saving both for the high-income group and for the low-income group, our basic theory was clearly confirmed. Disposable income, marital status and the presence or absence of children, and educational level all proved to be significant.6 The power of their influence was in the order stated with disposable income dominant. Race did prove to be significant for the high-income group while age was significant within the lowincome group. Further details must wait.

T HE main purpose of this paper is to investigate the relationships between the state distribution of military prime contract awards for experimental and developmental, tests, and research work (hereafter EDTR) and the state distribution of total military prime contract awards. It has been argued that the acquisition of research contracts in a particular state is desirable because such contracts lead to large procurement awards in the future, and these awards are important for the state's economic growth. Consider, for example, the remark of Senator Hubert H. Humphrey:

ONE of the most comrmronly used methods of depreciating capital goods is to write off their initial value in equal annual portions in the course of the estimated lifetime. When this lifetime is correctly estimated and when the depreciation fund is left idle its value (apart from price changes which will be left entirely out of account here) at the end of the lifetime will evidently be equal to the initial value of the capital good and will allow for the replacement of the worn-out item by an exactly identical new one. In reality, this equality will very seldom be fulfilled. This is not only due to the fact that the individual lifetimes of identical capital goods will vary so that, at best, only a correct average can be used which could yield equality for very large values of the initial stock only, but still more because depreciation funds are usually reinvested in one way or another long before replacement has become necessary. In particular, in dynamic processes replacement and depreciation may differ considerably. Already in 1953 E. Doomar [2] has proved that in an exponentially growing economy, when depreciation funds are immediately reinvested, the method of constant depreciation over time will lead to an amount of depreciation D, at time t bearing a constant ratio to the amount to be replaced R,, given by: Dt: Rt = (eyT -1) :yT1 ) where y is the rate of growth of the economy and T the average lifetime of the capital goods. For reasonable values of y and T the ratio may differ greatly from one. Dr. Horvat [3] studies the consequences of the method for a different kind of dynamic process. He considers a large stock of identical new capital goods Ko at t= 0. All items are assumed to have exactly the same lifetime, T. Hence, according to the method of