JN THE LIFE HISTORY of most sciences there are movements toward the study of larger aggregates or toward the detailed study of smaller and more fundamental units. My impression is that in most fields the movement toward the study of more micro units has predominated. Yet in economics in the 1930's the movement was in the macro direction. Both physics and biology (in the last three decades) have made great strides by studying smaller and smaller entitiesphysics by studying more minute fundamental particles and biology by studying the fundamental elements determining genetics. In a general sense economics has not been moving in this direction, although some work of this nature exists. The purpose of this paper is to review some samples of the work that exists and to argue that this area must become a major field of economic research and study. The question of how individuals in multiperson firms influence firm decisions seems like such a natural question to ask that it is amazing that it is not part of the formal agenda of economists as a profession. Of course it has been asked, but not by present-day economists in their professional capacity. In other words, micromicroeconomics has never become an established field. For the most part, theorists have not only not raised this question, but they have continued to develop micro theory in such a way as to discourage economists from raising this question. Part of the reason for this lies in the maximizing and optimizing biases of conventional micro theory, and part can be ascribed to the consequences of the long period required to refine the theory so that elements that did not fit the basic model were discarded.'

Some economists are doing research in applying Hicksian microtheory to explain the fertility behavior of man and fertility differentials. This article considers some highlights of the problem to serve for further reading. In reviewing the recent economic sociological and population theories there are 1) the theory of demographic transition which depends heavily on the reduction of desired fertility 2) Leibensteins 1957 theory of fertility which addressed itself primarily to the question and explanation of fertility decline in the course of sustained per capita income growth 3) the Chicago School theories among which is Beckers theory which applied the Hicksian version of microconsumption theory to family fertility behavior and came up with some interesting interpretations and 4) other theories which emphasize infant mortality effects socioeconomic status changes in norms and institutions threshold values in income and/or education etc. The author places more emphasis on the critique and methodological analysis of the Chicago School theories and finally turns toward the discussion of a possibly more adequate theory which assumes that there is a higher degree of substitution between the extent to which people indulge themselves in causual decision making and the point at which economic constraints force or create strong pressures for calculated decision making.

Journal Article Economic Theory of Fertility: Reply to Cullison Get access Harvey Leibenstein Harvey Leibenstein Harvard University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 91, Issue 2, May 1977, Pages 349–350, https://doi.org/10.2307/1885423 Published: 01 May 1977

Journal Article Population: A Symposium: Introductory Notes Get access Harvey Leibenstein Harvey Leibenstein Harvard University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 89, Issue 2, May 1975, Pages 230–235, https://doi.org/10.2307/1884427 Published: 01 May 1975

I. Typical behavior versus critical marginal behavior, 2.—II. Development, occupational shifts, and status shifts, 4.—III. The interstatus-income ratio compression effect, 5.—IV. Status and other IMU goods, 7.—V. Intra-household distributions and commitment claim drift, 11.—VI. On the price inelasticity of status goods, 15.—VII. Interstatus total utility differentials and the utility cost of children, 18.—VIII. On the utility of children, 21.—IX. Combining utility and utility cost relations, 26.

I. Introduction, 600. — II. Utility-effort relations, 601. — III. The theory of inert areas, 606. — IV. Inert areas and the inducement of change, 612. — V. The innovational-diffusion model, 617. — VI. Conclusions, 620.

Journal Article Investment Criteria and Empirical Evidence — A Reply to Mr. Ranis Get access Harvey Leibenstein Harvey Leibenstein University of California, Berkeley Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 77, Issue 1, February 1963, Pages 175–179, https://doi.org/10.2307/1879383 Published: 01 February 1963

Journal Article The Proportionality Controversy and the Theory of Production Get access Harvey Leibenstein Harvey Leibenstein University of California, Berkeley Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 69, Issue 4, November 1955, Pages 619–625, https://doi.org/10.2307/1881998 Published: 01 November 1955

ONE of the attractive aspects of the Harrod-Domar model is the magnificent simplicity of its variables. This is especially true of the incremental capital-output ratio (ICOR). It has served as a magnet for economists (including the present writer). Many have been unable to resist employing it as a major element in their attempts to understand economic growth. But are ICORs really helpful in understanding growth? How are ICORs ' and growth rates really related? In a recent paper, Ohkawa and Rosovsky2 presented a graph that showed growth rates and ICORs for Japan from 1890 to 1931 (sevenyear moving averages were employed). The remarkable thing immediately apparent from the graph is the inverse relation between the growth rates and the ICORs. In the few cases where this relation does not hold, the changes in growth rates are very small. Is this relation a curiosity that holds only for or is it likely to hold for other countries? I want to show both on the basis of theory and of empirical evidence that the latter is what we should normally expect. We should expect an inverse relationship between observable ICORs and growth rates, in most cases, for the following reasons: (1) the investment rate is a more stable variable than are other variables affecting growth; (2) the significance of non-capital inputs is greater than that of capital inputs; (3) changes in the level of employment of all inputs affect growth more than investment; and (4) some outputs are related probablistically to inputs. On purely a priori grounds, we can say nothing about these relationships. It is possible to invent hypotheses that would lead to the conclusion that ICORs and growth rates are not inversely related. However, it is also possible to reason plausibly, but not necessarily, that ICORS and growth rates are inversely related. It is this type of plausible reasoning that I wish to undertake. We know on the basis of studies by Solow, Aukrust, Fabricant, and others,3 that increases in capital contribute only a small proportion to total growth. The proportion is probably somewhere between ten and 20 per cent. As a consequence, most of the growth rate is accounted for by non-capital inputs. The main burden of the argument is that investment is a much more stable variable than the non-capital inputs. First we will examine the consequences of this assumption, and then argue why it is likely to be so. Consider the case in which output is explained by the Cobb-Douglas production func'On a priori grounds one can distinguish three types of ICORs. Elsewhere, I have made the distinction between the net incremental capital-output ratio and the adjusted incremental capital-output ratio. By the net incremental capital-output ratios (NICORs) I mean the incremental capital-output ratios as they would be on the assumption that the supplies of all other factors are held constant. By the adjusted incremental capital-output ratio (AICOR) I mean the capital-output ratio as it would be if it were adjusted to a given increase in the supply of other factors -for example, a one per cent increase in the labor force. In practice, however, neither of these concepts are actually employed. Instead, we use the actual increase in the capital stock as a ratio of the actual increase in income. In principle, we should not expect that the actual or observable ICOR would behave similarly to the somewhat purer and more restrictive NICOR and AICOR concepts. But the actual ICORs are much easier to employ statistically and have been used to a great extent. Therefore, their behavior is of great interest to us. In the case of both the NICORs and the AICORs we should expect a clear-cut positive relationship between capital and output. That is, as capital increases we should expect output to increase also. In addition, in both these cases we should not expect the capital-output ratio to vary in any special way with the growth rate. However, for practical work we use actual ICORs and it is these that are under consideration in this paper. See the author's Backwardness and 178. See also the excellent discussion in Gerald M. Meier, Leading Issues in Development Economics (Oxford University Press, 1964), 101 ff. 2 Ohkawa and Rosovsky, Economic Fluctuations in Prewar Japan, Hitotsubashi Journal of Economics (Oct. 1962), 24. 'R. Solow, Technical Progress and the Aggregate Production Function, this REVIEW XXXIII (Aug. 1951). See also R. Solow, Investment and Growth, Productivity Measurement Review, No. 19 (Nov. 1959); Odd Aukrust, Investment and Growth, Productivity Measurement Review, No. 16 (Feb. 1959); and S. Fabricant, Basic Facts on Productivity (New York: National Bureau of Research, 1959).