It has been said that in a world of perfect knowledge regarding the structure of the economic system and the values of all exogenous variables, policy making becomes a trivial problem.1 This is true in the sense that it is always possible, with full knowledge and perfect foresight, to choose the appropriate policy for the following period, but it ignores the fact that the correct policy on a period to period basis may turn out to be impractical or even impossible in the longer run. Current policy decisions do not ordinarily have their impact solely in the current period, but rather over a number of periods in the future. Thus, in addition to offsetting the undesired effects of changes in exogenous variables, current policy decisions must offset the current impact of past policy

In 1940 the labor force participation rate for married women, husband present, was 14 percent. By 1970 it had increased 26 percentage points to 40 percent. The supply and demand variables associated with this increase have been widely investigated. However, there has been ve'ry little research on the economic effects of wives' labor force participation. (See R. Agarwala and J. Drinkwater, Margaret Carroll, Robert Holbrook and Frank Stafford, Lucy Mallan and Jacob Mincer.) This paper analyzes two economic effects: the effect on the ratio of consumption to income (CIY) and the effect on the ratio of durable goods purchases to income (DurlY). The primary question addressed is: Controlling for total family income and several other variables, what are the differences (if any) in the ratios of CIY and DurlY for working-wife (W-W) and nonworking wife (N-W-W) families? Looked at in another way, the question may be rephrased: How do W-W families use wives' income?