All that one could do is to rank these goods in accordance to perceived effectiveness. The use of mathematics in economics poses another serious problem. The employment of mathematical functions implies that independent variables are causing the dependent variable. Thus by stating that consumption is dependent on disposable income the mathematical economist would say that a change in the disposable income will cause a change in consumption. The magnitude of the change in consumption will be calculated from the equation that the mathematical economist has established.
Causality however is set by the nature of human beings i.e. that they possess a rational mind.
This in turn means that an individual s consumption is not caused by disposable income but by his rational decision. In other words, every individual decides how much to consume and how much to save in accordance with his own goals and circumstances. Every individual assesses the facts of reality of which one of them is his disposable income. Since causality emanates from the human mind obviously no functional formulation is possible. Dr Frank is chief economist with Ord Minnett Jardine Fleming Futures, Sydney.