out the human capital of children. But Farr deserves credit for pointing out that
human capital in general capitalizes pay less invested consumption.
Keynes’ teacher Alfred Marshall agreed with Farr in 1990’. As I read this passage, Marshall interpreted maintenance consumption as investment. So did B. F. Kiker? in 1968. | interpret it as exhaust in taste satisfaction enabling energy to earn pay concurrently, while preserving but not increasing pay expectations in future. Invested consumption would mean addition to human capital concurrently for
expected realization with interest in higher pay later.
Meanwhile economists had developed the complementary idea of human capital as
present cost of investment accumulated before. Adam Smith? in 1776 wrote
.. The acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expense, which is
a capital fixed and realized, as it were, in his person.
The conversion of some consumption into human capital was a favorite theme of Frank Knight a generation before Schultz. Only the rest is what Schultz called pure consumption eliminated from the economy in satisfying tastes. Becker added in 1964 that this investment must be expected to be recovered with interest, at least when paid by employers in job training. Schultz had also pointed out that human capital depreciates, and invests some work in itself in the effort of learning to complement the exterior investment of nurture and schooling. Ben-Porath, expressing a Schultz-led consensus, added in 1967 that human capital growth is invested consumption (the nurture and schooling) plus self-invested work less human depreciation. All these ideas are now accepted everywhere in human capital
studies.
7 Principles of Economics. 8 A History of Human Capital. | learned of Farr from Kiker. ° The Wealth of Nations.
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