Some quantitative concepts of value and utility from a utilitarian point of view

This paper clarifies and interprets some basic quantitative concepts of value, utility and utility function from a utilitarian point of view. First, I discuss the question as to whether value is objective or subjective. I hold that value is subjective and statistical in nature (although from the various subjective values of a certain object a norm can usually be obtained). Second, I emphasize the distinction between use value and exchange value in relation to utility. Third, I propose a law of diminishing incremental interest, which refers to the incremental (marginal) utility of money. Fourth, I identify the utility of money with the von Neumann-Morgenstern utility. Fifth, I question the necessity of the usual normalization of utility functions and the restricted linear transformation (and the consequent concept of strategic equivalence). Sixth, I discuss in detail the terminal values and utilities of a utility function from a philosophical rather than mathematical point of view, particularly the boundedness of a utility function and the magnitudes of V ₀ and U ₀. Finally, I conclude that, in order to be able to have interpersonal comparisons of utility, utility should have the same dimension as value rather than no dimension, and the normalization problem should be reconsidered in the light of terminal values and utilities.     

Retrospective on the utility theory of von Neumann and Morgenstern

This article offers an exegesis of the passages in von Neumann and Morgenstern (1944, 1947, 1953) that discuss their conception of utility. It is occasioned by two factors. First, as we approach the semicentennial of the publication of Theory of Games and Economic Behavior, its immense impact on economic thought in the intervening years encourages serious reflection on its authors' ideas. Second, misleading statements about the theory continue to appear. The article will have accomplished its purpose if it helps others appreciate the genius and spirit of the theory of utility fashioned by John von Neumann and Oskar Morgenstern.     

A review of research on the happiness measures: A sixty second index of happiness and mental health

Eighteen years of research using the Happiness Measures (HM) is reviewed in relation to the general progress of well-being measurement efforts. The accumulated findings on this remarkably quick instrument, show good reliability, exceptional stability, and a record of convergent, construct, and discriminative validity unparalleled in the field. Because of this, the HM is offered as a potential touchstone of measurement consistency in a field which generally lacks it.     

Demographics: people and markets

The basics of demography are now basic to us business as well. Demographics combine demographic data with socioeconomic and geographic factors to help business and other managers know the market for their goods and services. This pamphlet explains market, product, and site analyses, discusses data sources and resources, and includes case studies involving major corporations. Post-war population trends have had an enormous impact on consumer and labor markets, bringing home to business the importance of taking advantage of demographic shifts. Advances in computerized access to data describing changes and increased consciousness of their economic significance has spurred the application of demographic knowledge by managers and the growth of the demographics information industry. The pamphlet describes the resources and methods of demographics including the creation and use of demographic data products.     

Ordinal utility models of decision making under uncertainty

This paper studies two models of rational behavior under uncertainty whose predictions are invariant under ordinal transformations of utility. The quantile utility model assumes that the agent maximizes some quantile of the distribution of utility. The utility mass model assumes maximization of the probability of obtaining an outcome whose utility is higher than some fixed critical value. Both models satisfy weak stochastic dominance. Lexicographic refinements satisfy strong dominance.The study of these utility models suggests a significant generalization of traditional ideas of riskiness and risk preference. We define one action to be riskier than another if the utility distribution of the latter crosses that of the former from below. The single crossing property is equivalent to a minmax spread of a random variable. With relative risk defined by the single crossing criterion, the risk preference of a quantile utility maximizer increases with the utility distribution quantile that he maximizes. The risk preference of a utility mass maximizer increases with his critical utility value.     

The dependency ratio and optimum population growth

This paper examines the effects of introducing a variable dependency ratio in Dasgupta's (1969) model. We consider a case in which the probability of dying as well as the rate of participation in the labor force change with age. It is shown that the inclusion of those realistic demographic features slows down the optimal rate of population growth and increases the rate of consumption. In spite of the reduction in the rate of population growth, this rate can still be positive. The sensitivity of the solutions to changes in the demographic parameters of the model is examined.     

Social policy and the birthrate

The arguments for and against policy measures designed to increase birth rates in European countries are reviewed. The author concludes that the deterioration of the environment associated with the growth of population in developed countries outweighs any arguments in favor of policy measures to increase fertility.     

Consequentialist demographic norms and parenting rights

This paper extends the author's recent work on dynamically consistent consequentialist social norms for an unrestricted domain of decision trees with risk to trees in which the population is a variable consequence — i.e., endogenous. Given a form of ethical liberalism and ethical irrelevance of distant ancestors, classical utilitarianism is implied (provided also that a weak continuity condition is met). The repugnant conclusion that having many poor people may be desirable can be avoided by denying that individuals' interests extend to the circumstances of their birth. But it is better avoided by recognizing that potential parents have legitimate interests concerning the sizes of their families.That action is best, which procures the greatest happiness for the greatest numbers. Francis Hutchison (1725).An abiding interest in concepts of optimality for the choice of population has been stimulated by frequent discussions with Partha Dasgupta. This paper was presented at the seminar on Distributive Justice and Inequality at the Wissenschaftskolleg zu Berlin, May 1986. I am grateful to the audience for their helpful comments, especially Maurice Salles and Patrick Suppes, and especially to John Weymark for carefully reading and suggesting distinct improvements to the earlier version.