----------------- HES POSTING -----------------
One of the difficulties here, as with many technical terms in economics, is
that the term is invariant while its meanings (or assumptions) vary over
time. In the Anglophone literature alone, the meaning of "utility" has
varied with changing theoretical commitments with respect to the nature of
utility, where utility resides and whether utility is measurable.
Consider, in particular,
1) Does "utility" denote a theoretical view of what is good, and, if so,
what is that view?
2) Is utility an objective property of things, or a property of an
individualís subjective view of things?
3) Wherever it resides, in things or minds, is utility scientifically
measurable? And, if not, is welfare economics possible?
4) Are the different kinds of utility a person experiences (measurable or
not) commensurable?
The classical economists generally thought of utility as an objective
property (roughly akin to "usefulness") of things ñ consistent with their
labor theory of value. Jeremy Bentham originally used the term to refer
the capacity of a thing to produce good, such as benefit, well being,
pleasure, happiness, etc. When applied to actions rather than things,
Benthamís principle of utility refers to the tendency of actions to produce
good. Bentham famously viewed good in hedonic terms, as the balance of
pleasure over pain; he was committed to the scientific measurement of
utility, and regarded all utilities as commensurable: pushpin is as good as
Pushkin.
1) Yes, there is a theoretical view of what is good,
2) utility resides in things,
3) utility is potentially measurable, and
4) different kinds are commensurable.
By the late 19th century "utility" had come to be identified not with the
tendency of an object or an action to produce good, but with the good
itself. Thus a person's utility is not her usefulness in promoting good
around her, but her own good.
1) Yes, there is still a theoretical view of what is good, but
2) utility now resides in minds.
3) Utility is potentially measurable, but, for some,
4) different kinds may not be fully commensurable, as with J.S. Millís
utilitarian apostasy.
20th-century rational-choice theory uses "utility" as a name for a
mathematical function that represents a single, complete, transitive
ordering of preferences over consumption bundles. The term "utility" does
no analytical work -- "preference function" would be more precise -- and
is, in fact, confusing in that when the function is maximized, the consumer
is said to be maximizing utility, as if utility were some quantity of well
being, pleasure, happiness, etc. But consumers don't chose x over y
because U(x) > U(y), that is, because more good is produced by x than by y.
It's the reverse. A utility function is chosen because x is preferred to y
-- the preferences are the analytical primitives. Thus,
1) No, modern utility theory eschews a view of what is good, save for the
(mostly implicit) idea that it is good to satisfy one's preferences, i.e.,
it is good to get what you prefer. (This last point introduces another
potential confusion, the conflation of satisfying preferences -- getting
what you want -- with the idea that utility should seen as a synonym for
satisfaction).
2) Utility resides in minds;
3) utility is not measurable, which makes policy (if not voluntary trade)
problematic, but
4) different kinds of utility are presumed commensurable, at least in the
standard theory that assumes a single (and complete) ordering of
preferences.
P.S. Expected utility theory (choice under risk) of the VN-M variety
manages to partly reintroduce (or at least smuggle back in) the cardinality
that modern utility theory had sought to banish. Unlike choice under
certainty, we can express the ratio of EU(x) and EU(y) numerically,
producing a magnitude that at least implies some quantity of good.
Thatís quite a semantic journey for one term: from the usefulness of
things, as measured by their ability to produce good, to the good that
things produce, to the name of a maximand in a theory that disavows any
concern with good.
(Many of these ideas can be found in John Broome, Utility Economics and
Philosophy)
Thomas (Tim) Leonard
------------ FOOTER TO HES POSTING ------------
For information, send the message "info HES" to [log in to unmask]
|