1 od mz—C
a(F[H ))=2(@-C)=—— tt C= (A6.1) and also rH) = — =n (A6.2)
Pay 7, literal and imputed, is the measure of gross realized work if 1 am right in
(A5.5). I take this as meaning all adult productive activity not self-invested. Then the ratios 7 /H and C_ /H , the ratio of invested consumption to human capital, might both be intuited as biological norms, like the generation length, which tend to hold steady over time. Meanwhile the definition f =F /K, in (A1.6) and (A1.6a) is
applied to human capital as
ya PCH) _ m—-C_ ~f(H) FC)
(A6.3) What we want is to quantify f(H) in order to reveal H from measured or modeled m—C_. Next generation theory measures cash flow rate of total capital, which simplifies to the pure consumption rate, at 3.5% a year as a reciprocal of the generation length. I argued that the risk component in rate of return is captured in cash flow rate, rather than growth rate, that return at any given moment varies only with risk, and that human capital as a whole should prove the riskier and higher-
return factor. Then f(H) should prove generally higher than 3.5% per year.
That could give the key to quantifying collective human capital through (A6.3). I will
not attempt that step here. A reason is that national accounts reflect pay mixed with
APPENDIX A: The Argument in Notation 3/7/16 15
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