Utility — an almost vacuous concept

7 September, 2015 at 10:47 | Posted in Economics | Leave a comment

There is always a danger that, as you climb higher and higher, the principles become more and more general and harder and harder to translate into lower level operational principles …

Gary-Becker-CartoonThe economic notion of Utility looks dangerously general in the hands of, for example, Gary Becker. Becker won the Nobel Prize for modeling great swathes of what we do in day-to-day life under the principles of market equilibrium and rational choice theory, from drug addiction to racial discrimination to crime and family relations. Becker supposes that the agents he models act so as to maximize their expected utility. At that level of generality, say Principle U, we people are really much the same at base, governed by the same motivations and the same principle of human natur. The difficulty, or the trick, is to determine just what, in the case under study, utility consists in, which can include anything from financial gains to serious illness or the joys of watching your spouse have a good time. What in fact, are the principles that operate here? What does ‘utility’ mean here? This enterprise is relatively unconstrained, so that too much can count as utility. If (almost) anything goes, the principle gives very little help in the here and now.

Nancy Cartwright & Jeremy Hardie

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