Alternative Concepts of Utility and Applied Economics

Polish Journal of Political Science Vol.1 No.4 of 2016, 2016

Utility is a fundamental notion of orthodox (mostly neoclassical) economics, but as it is an idea, that is very vague and thus impossible to define and measure, it did a lot of harm to economics as a science. Therefore, I strongly argue that this outdated and imprecise concept should be finally abandoned, especially as a basis for microeconomic consumer theory, because it is not only illogical, but also ideologically not neutral, and thus unscientific. For sheer inertia, the concept of utility, as a basis for microeconomic theory, is taught to the students, thus corrupting the young minds. Furthermore, the present financial and economic crisis, the most serious since the 1930s, should force the economists from the academia to seriously revise the foundations of microeconomic theory, and, as logical consequence, rewrite the handbooks in microeconomics. I do not merely argue that the utility theory defies both logic and empirical justification, as many authors did it before me. I argue that the very notion of utility is unscientific, and was kept in microeconomic books only because of sheer inertia, but this way it made a lot of harm to the science of economics, and, as a result to the real economies. I also argue that the subjectivist theory of value should be replaced with an objectivist one, based on value of labour.

2004

PERCEIVED UTILITY AN EXPERIMENTAL STUDY IN BEHAVIORAL ECONOMICS, 2021

In the 18th century, when rationality was accepted and the belief that people are selfish due to their natural nature, the first effort of economics, which aimed at human as a social science, was to provide the individual with a universal structure based on the basic assumptions of "rationality and selfishness". The goal of this individual was also

1992

Descriptive theories of decision making are constrained by the need to explain the following behavioral phenomena: risk aversion, gambling, purchases of insurance, investment, the paradoxes of Allais and Ellsberg, intransitivity of preference, irregularities of choice, preference reversals, risk judgments, violations of branch independence, the difference between buying and selling prices, violations of monotonicity, and the relationships between risky and riskless situations. The papers in this special issue on utility theory address these empirical phenomena and explore theories proposed to explain them.

European Economic Review, 1976

Data on income after tax, schooling completed, job held. age, and 'levei of satisfaction' of 2663 members of the Dutch Consumer Union have been used to estimate regression equations of two types. Type I may be called a s;'t"cification of a utility function, Type II an 'earnings function' (where income after tax was used as earnings). For both types a number of alternatives were estimated both with regard to mathematical shape and with regard to variables included. Defining equitable or justified income differem% as differences which do not change the level of satisfaction, a formula for equitable incomes for given combinations of job, schooling and age can 'ir= derived from Type 1 equations. All regression cocffkienis are found to be lower than the corresponding earnings function coefficients. The latter can then be decomposed into a 'compensatory' component and a 'scarcity rent' component.

SSRN Electronic Journal, 2005

This paper aims at showing the relevance of procedural utility for economics: people do not only care about outcomes, as usually assumed in economics, they also value the processes and conditions leading to outcomes. The psychological foundations of procedural utility are outlined and it is discussed how the concept differs from other related approaches in economics, like outcome utility, outcome fairness or intentions. Institutions at the level of society and fair procedures are shown to be sources of procedural utility, and novel empirical evidence on the role of procedural utility in important areas of the economy, polity and society is presented.

2003

Journal of Economic Methodology, 2019

2019

In this issue of Academic Quarter, we focus on the concept of utility. References to utility are ubiquitous in both practical and theoretical settings. One of the most widespread ways of arguing for the initiating of or holding on to a certain practice or activity is that it is useful to us, and appeals to utility is a common and important argumentative move in theoretical discussion. However, the vast and often diverse specifications of utility reveal the indeterminacy inherent in the comprehension of utility. This gives cause for a struggle for the meaning and reference of utility, which in some cases, may lead to altering the originally positive normativity of utility into a negative interpretation. We get confused about utility, and become uncertain of how to apply and how to regard the concept. But at the same time, we cannot seem to escape it or avoid it, and we certainly cannot seem to be indifferent to its forceful nature.