Austrian Utility

From Human Action --

"...there is a valuation of the utility dependent upon the
having of the portion, compound, or supply in question.
Utility means in this context simply: causal relevance for the removal of felt uneasiness. Acting man believes that the services a thing can render are apt to improve his own well-being, and calls this the utility of the thing concerned. For praxeology the term utility is tantamount to importance attached to a thing on account of the belief that it can remove uneasiness. The praxeological notion of utility (subjective use-value in the terminology of the earlier Austrian economists) must be sharply distinguished from the technological notion of utility (objective use-value in the terminology of the same economists). Use-value in the objective sense is the relation between a thing and the effect it has the capacity to bring about...."

From the viewpoint of this Mises passage in Human Action, it should be clear that the only people that would have utility are slaves.

A drink has usefulness or utility in satisfying thirst in both the subjective and the objective senses. Food has usefulness or utility in the same ways for hunger.

What possible sense can it make to talk about the utility of an individual by somehow combining thirst and hunger or their lack?

Utility, Marginal Utility, and Diminishing Marginal Utility all properly apply to things, not people.

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You're correct given this

You're correct given this definition of utility. But that's obviously not the meaning of utility in the context of the ongoing IUC debate on this blog. Aside from the "usefulness" definition, which is the one Mises cites, utility has (since Bentham at least) had another definition, which is something like "the satisfaction obtained from consumption of things, etc." This latter definition is the one at issue in the IUC debate.

Glen, You’re correct given

Glen,

You’re correct given this definition of utility. But that’s obviously not the meaning of utility in the context of the ongoing IUC debate on this blog. Aside from the “usefulness” definition, which is the one Mises cites, utility has (since Bentham at least) had another definition, which is something like “the satisfaction obtained from consumption of things, etc.” This latter definition is the one at issue in the IUC debate.

Agreed. Your definition is better than 'happiness', but but I have trouble believing that a combination of hunger, thirst and fatigue or relief from them can be meaningfully and usefully combined into some number of utils, even imaginary ones.

Regards, Don

Just what we need. Yet

Just what we need. Yet another concept of utility to confuse the issue. :)

Don: I'm not sure why you

Don:
I'm not sure why you object specifically to the combination of hunger and thirst into a single measurement. We can easily observe people doing this via revealed preference by offering someone who is both hungry and thirsty different bundles of food and water and seeing which one he picks. He decides by assessing different combinations of hunger and thirst and determining which he will find most satisfactory overall.

Of course, whether this combination has any definite magnitude, rather than simply an ordering, is another question altogether. Incidentally, I would argue that the Mises quote above implies the former position at least as strongly as the latter.

Brandon, Don: I’m not sure

Brandon,

Don:
I’m not sure why you object specifically to the combination of hunger and thirst into a single measurement. We can easily observe people doing this via revealed preference by offering someone who is both hungry and thirsty different bundles of food and water and seeing which one he picks. He decides by assessing different combinations of hunger and thirst and determining which he will find most satisfactory overall.

Assume the best case, in which there is no uncertainty at all.

Individual A sacrifices all of his resources necessary to get 1 cup of water and then proceeds to sacrifice his remaining resources necessary for 800 calories of food. No more resources will be applied against either water or food.

Individual B sacrifices all of his resources necessary to get 1.5 cups of water and then proceeds to sacrifice his remaining resources necessary for 650 calories of food, No more resources will be applied against either water or food.

What possible measurenent or comparison can be made? Note that less than 1 cup of water has no value to either individual, nor does any amount of water in excess of 1.5 cups. The same for food.

Regards, Don

"...I have trouble believing

"...I have trouble believing that a combination of hunger, thirst and fatigue or relief from them can be meaningfully and usefully combined into some number of utils, even imaginary ones."

Does that mean you're taking Brian's side in the ongoing debate? And are you also rejecting the possibility of intrapersonal utility comparisons?

Glen, Does that mean

Glen,

Does that mean you’re taking Brian’s side in the ongoing debate? And are you also rejecting the possibility of intrapersonal utility comparisons?

To a degree, I'll generally take Brian's side sight unseen, from experience, but after just spending several hours switching over from failed computer hardware, I'm not inclined to verify Brian's side in detail.

I know what my current preferences are, but I can't predict what they'll be tomorrow. But in neither case, can they be reduced to a single number, nor is it likely that the degree, if any, to which food can satisfy thirst, or water, hunger, will be significant.

Regards, Don

Don, I know what my current

Don,

I know what my current preferences are, but I can’t predict what they’ll be tomorrow.

Really? You have absolutely no idea what your preferences might be tomorrow? When you go to the grocery store, do you only purchase food you plan to eat within the next few hours, because you are completely unable to predict what your food preferences might be later this week?

Or are you just saying that you are unable to predict with a 100% degree of certainty what your preferences will be tomorrow? Because if that's the case, the same is true with regard to any belief, such as whether or not the sun will rise tomorrow. After all, we have no way of proving to ourselves with a 100% certainty that the laws of physics won't just suddenly change when we least expect them to. And yet most of us don't raise this objection every time someone makes a prediction about future events.

Can we reduce preferences to a single number? Sure we can. All we have to do is make some arbitrary number up. We essentially do exactly the same thing when we measure, to use Scott's recent example, the width and length of his mousepad. We could call it 6x6 inches, or, we could make up a new measuring unit just as arbitrary as inches, and call it one billion by one billion Scheules.

The interesting question is not whether we can attribute an arbitrary unit to our preferences - we certainly can, it's easy - but how useful and reliable one set of measurements is when we try to compare it to another set of observed preferences.

In the case of the mousepad, measurement comparisons don't suffer too many difficulties, though they are, by necessity, imperfect. Our ability to measure distance, for example, is limited by our observational capacity, and yet we know that if we had a better observational capacity, we could improve our accuracy even further, and still never achieve perfect accuracy to an infinite number of decimal places.

In the case of comparing two measurements of preferences, we run into greater difficulty, because unlike distance which can be measured with a ruler or a microscope, we have fewer tools when we try to measure preferences. The easiest tool is simply our natural powers of observation: One of the stages of childhood development is learning how to recognize when other people are happy or sad, satisfied or dissatisfied. More complex tools, such as those that could be used to measure brain activity directly (in the hope that this would be more accurate and avoid errors caused by incorrect reporting, i.e. acting sad when really you are happy), could also be used to measure and then compare two or more sets of preferences. The fact that there is lots of room for error in both our natural and artificial forms of observing satisfaction is not evidence that such observation is impossible, only that it is more difficult and perhaps less reliable those other observable, measurable phenomenon.

I think this is just a

I think this is just a language issue. Economic decision makers would have utility *relations*, basically a chart of equivalences or preferences between the utility of different items for them.

When we talk informally about a "person's utility", we're not talking about some intrinsic utility that the person has to decision makers, but what utility various goods/bads have *to them*.

You could go through a lot of verbiage everytime you need to discuss this very useful concept, if you were to canonize the original usage of the term and not subject it to the messy whims of natural language usage. The rest of us seem fairly comfortable knowing that when dicussing economic decision makers, utility refers to what that decision maker would trade for various goods, and not to what other decision makers would trade for *them*.

It seems to me that this shorthand would only be problematic among those who support slavery.

Also known as the Sch'long.

Also known as the Sch'long.

We could call it 6×6

We could call it 6×6 inches, or, we could make up a new measuring unit just as arbitrary as inches, and call it one billion by one billion Scheules.

Actually, the Scheule already exists. It's equivalent to 9.2 of your human inches, which---not coincidentally---is also the length of my...

Any or all, I suspect that

Any or all,

I suspect that defining utility as something (especially quantizable) that a person has rather than as the usefulness of some thing to an individual's purpose also brings in other baggage such as indifference curves and marginal rates of substitution.

This would be plausible if we were comparing various quantities of different deserts. However, I wonder if it isn't the usefulness of the mathematics that drives the theory, rather than reality.

Convince me that you can draw an indifference curve and/or derive a marginal rate of substitution between a quadruple bypass surgery and a lobotomy. When Mises talks about 'removing uneasiness' rather than satisfaction these kinds of things fit in fine.

Regards, Don

Yes, Mises is actually

Yes, Mises is actually avoiding an issue that is not needed to proceed with theory. An issue that may actually derail proper investigation. He is dealing with what he can given the nature of the area under investigation. He is abstracting away non-essential information.

Ha!

Ha!