27 August 2010

Utility: Use and Abuse

Philosophical roots of utility or utilitarianism dates to Jeremy Bentham's An Introduction to the Principles of Morals and Legislation, 1781 and John Stewart Mill's Utilitarianism, 1863. This reigned supreme, and in a sense still does, but for John Rawls' A Theory of Justice, 1971.

Lest I deviate further, my current concerns are more as a student, rather my sticky wicket as a teacher, of Economics, as I fail to understand utility.

While in school, when my teacher explained the diminishing marginal utility it looked fine. More and more of the same item (say, mangoes) will give me less and less utility. It looked fine and still does if your thoughts don't go astray. One can eat one mango every day then it would increase utility for having more and more of the same. It does not hold for money or maybe even for items like diamond.

My major concern today is that I woke up in my dream trying to understand utility. A middle-aged young person, could be me, left from home for work after having a lavish breakfast without mangoes, but at the work place saw mangoes that were smelling nice and immediately took and ate one, a sense of desire-fulfillment, it increased utility.

At work, the person had to sell fruits, including mangoes, and besides getting a fixed wage the person also had a share in the amount of fruit sold. To maximize income, the person tried to sell more fruits by convincing the buyers about the merits of the fruit. For mangoes, the king of fruits, the person tried telling about its taste and value, knowing fully well, and having tasted it a while ago, that unseasonal mangoes during monsoon are not that tasty. Nevertheless the person continued with the story as it was convincing for many buyers and this would increase money income, and hence, utility.

At the end of the day, before closing shop, the person came across some poor children begging for food and to whom, out of concern and also to atone for the lies told during the day, the person gave some mangoes. It gave mental satisfaction on helping the needy, and hence, increased utility.

Utility got enhanced through desire-fulfillment, increasing money income and mental satisfaction. Do all these increase utility. Yes, of course, but in different ways. Are they one and the same? Can we reduce them to a single measure? No, definitely not. Again, this takes me to my school maths teacher who drove into our heads that mangoes and marbles cannot be added together. It will be disutility (if one can use the term) to the concept of utility.

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