3 ms·
Economics doesn't assume everyone wants to maximize money. It assumes everyone wants to maximize utility, and then uses money as a (poor) proxy for utility. It'
by achompas 16y ago
Economics doesn't assume everyone wants to maximize money. It assumes everyone wants to maximize utility, and then uses money as a (poor) proxy for utility. It's a subtle, important difference.
- ghb 16y agoSerious question: what's utility?
- achompas 16y agoWikipedia calls it "relative satisfaction." I'd call it "personal benefit or gain." Considering that, it's clear why we'd use money as a proxy. Not a perfect one, of course.
- sprout 16y agoPeople want to maximize utility, we'll use money as a proxy, people want to maximize money. I suppose there are economic schools of thought that use other proxies for utility, but you seem to be agreeing with me insofar as the primary stand-in for utility is money, and it is a poor one.
- achompas 16y agoNo, that was my exact point. In general, economics treats money and utility as distinct. I should've been clearer: money only proxies for utility in behavioral experiments. Labor supply theory, for example, assumes people maximize utility by choosing a combination of work and leisure. It doesn't assume people work as much as possible (or, maximize their money).