process shows that one company has earned a higher rate of
interest than another, at the same time that its insurance expenses bear a
lower ratio to its insurance claims paid, _there is no escape from the
conclusion that during the period under observation it has served its
policy-holders more economically_, and the test is therefore scientific.
Though, if one company shows a higher rate of interest, while the other
shows a lower ratio of insurance expense, it will still be necessary, to
complete the test, to equate either the rates of interest or the ratios of
insurance expense (it does not practically matter which), and note how
this affects the relation of the duly corrected ratios on the other score.

To be exact, if the average vitality of the members of the two companies
differ (other things being equal, it is always cheapest to belong to that
company which has the lowest death rate), the ratios of insurance expense
to expected, as well as actual, claims of each must be found, and equated.

The science of this procedure, or mode of testing expenses, and also its
practical simplicity, may be more clearly perceived by reference to its
practical application in the following table:

_Table Exhibiting Ratio of Expense, Determined by the New Mode, of Companies
Doing Business in Massachusetts during the Year 1883._
___________________________________________________________________________________________________________________
| | | | | | | | |
| | | | | |Expense | | |Net Rate
| | | | | |per $100 | | | of
| | | | | |of claims| | |interest
| | Death |Estimated |Difference |Expense |paid. | Interest | Expense | earned.
Name of Company. |Loca-| claims |Premiums. | or Net | on the |---------| Receipts. | on the |--------
|tion.| paid. | Reserve |Insurance |score of | R | R | | score of | R | R
| | | thereon. |furnished. |Insurance. | a | a | |investment.| a | a
| | | | | | t | n | |