Surrogates In Income Theory: A Reply.

Abstract The article presents the author's reply to researcher L.S. Revsine's rejoinder on the article "Expectations and Achievements in Income Theory." The author feels that Revsine's comments on the article are based upon a series of misconceptions and unsupported assertions. The author's article was primarily concerned with relationships between ex ante and ex post measures of periodic income and asset values and why both sets of concepts are required. It concluded that the case for current cost accounting cannot be made to rest on the hypothesis that current market prices of assets are reliable indications of the present values of those assets, except under tight conditions; rather, the justification for current cost accounting depends upon a set of other factors. The rejoinder does not challenge successfully the validity of any of the author's analysis. In his rejoinder, Revsine first asserted that the author stated that previous authors have ignored the excess of present values over current market prices of assets for all nonmarginal asset purchases.