THE THEORY OF INTEREST

eral, consist of those final physical events in the outerworld which give us our inner enjoyments.

This real income includes the shelter of a house, themusic of a victrola or radio, the use of clothes, the eatingof food, the reading of the newspaper and all those otherinnumerable events by which we make the world aboutus contribute to our enjoyments. Metaphorically wesometimes refer to this, our real income, as our “breadand butter.”

These finals in the stream of outer events are what wecall our “living,” as implied in the phrases cost of livingand earning a living. The final outer events and the innerevents which they entail run closely parallel, or, rather,the inner events generally follow closely in time on theouter. The enjoyment of music is felt almost instantane-ously as the piano or singer produces it. The enjoymentof food is experienced with the eating or soon afterthe eating.

These outer events, such as the use of food, or clothes,etc., are like the resultant inner events in not being veryeasily measured. They occur largely in the privacy ofthe home; they are often difficult to express in any stand-ard units. They have no common denominator. Even theindividual who experiences them cannot weigh and meas-ure them directly. All he can do is to measure the moneyhe paid to get them.

§3. Cost of Living, a Measure of Real Income

So, just as we went back of an individual’s enjoymentincome to his real income, we now go back of his real in-come, or his living, to his cost of living, the money meas-ure of real income. You cannot measure in dollars eitherthe inner event of your enjoyment while eating your din-

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