Dr. Moulton's estimates of saving and investment

Dr. Moulton recently stated, in reply to a criticism of his results by Professor Bye, that his conclusions could be proved false only if his statistical findings were "discredited." This article attempts to show that Dr. Moulton's estimates of saving and investment are inadequate. The estimate for saving is inadequate for the following reasons: (1) the small coverage of the budget surveys used to determine the proportion of income saved, especially in the higher income groups which are responsible for most saving; (2) the variety of different definitions of saving contained in these budget surveys; and (3) the assumptions upon which the estimates of the number of families in each income class and the volume of their income are based. The estimate of investment is found to be less than the estimate of saving, because the former contains no allowances for: (1) capital gains (which are included in the estimate of saving); (2) private outlets for "investment money" (i.e., other than publicly offered securities); and (3) investment in working capital, etc., (which Dr. Moulton chooses to call "unproductive"). The article concludes that no statistical evidence is available to tell whether savings and investment are unequal, or, if so, which is in excess of the other.