----------------- HES POSTING ----------------- 
As a corrective to the "utils" nonsense that they had so often been exposed 
to in previous courses (you have heard, though never delivered I'm sure, 
the lecture that compressed about fifty or seventy-five years of the 
subject's history into a single throw-away line - "in the olden days 
economists thought that utility could be measured cardinally, isn't that 
absurd, ha ha ha, what did they use? utils? ha ha ha ha , now we are so 
much more enlightened") when I used to teach Economics 212 at the 
University of Saskatchewan, I regularly assigned a slim red 
book on demand theory whose title and author, alas, elude me. It was one of 
the few places in the secondary lit that correctly (IMHO) positioned and 
treated seriously the utility->price discussion. (If the inestimable Peter 
Dooley is on the list, he may remember the book's title and author.) 
 
The argument goes something like this - the discussion of whether utility 
is measurable or not is no more nor less far fetched than the discussion of 
whether other theoretical concepts - like time or distance, for example - 
are measurable. It's just a matter of correctly defining a unit. The 
(perhaps Marshallian?) view that  utility is cardinally measurable in terms 
of money (measuring how much money you will part with, assuming constant MU 
of money, measures the utility you are receiving) comes apart when income 
and substitution effects are acknowledged, whence Slutsky and Hicks. In 
other words, we can't consistently define a unit. 
 
That being said, the discussion of how we (or societies) determine what 
something is worth - i.e. the theory of value - surely is no less than the 
core of our subject. Or at least appears to have been for its first three 
hundred years or so. 
 
Ken Gordon  
 
 
 
------------ FOOTER TO HES POSTING ------------ 
For information, send the message "info HES" to [log in to unmask]