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economists (particularly of the capitalist variety) certainly have a point of view that the economic utility function can be directly transformed into and repre

economists (particularly of the capitalist variety) certainly have a point of view that the economic utility function can be directly transformed into and represented by monetary value. literally the point of the utility function is to represent behavioral preferences with a number, which can then be calculated on. by turning decisions into math, this transformation has the effect of shielding rational actors from the emotional consequences of their actions. for example, this is why an interaction with a large (inter-)national bank is often very different from the local credit union. a credit union may give you a break on fees or on check clearing times because they see you standing in front of them in need and they're sympathetic to your situation, but at a major bank, policy decisions are made in private offices far from contact with everyday customers and are simplified into a cold hard calculation about how much profit can be extracted from you. also i'd posit that not only are humans sometimes not rational, but that humans are commonly irrational. rationality derives from a useful simplification of the world that helped us survive against bigger, faster & stronger animals. we've stretched rationality marvelously to make it a useful model of a wide range of relatively simpler macro-phenomena. but it's a poor model for complex actors like people, who exhibit a much wider degree of freedom and range of action. rationality necessarily assumes that a single best choice can be made in any situation (rarely, two or more choices might be equivalently good but that's not relevant here) and that all relevant factors can be incorporated into that single decision. this is almost never the case in real life, except maybe in the problem sets assigned in school. it's as likely that a rational model is designed to coincide with the center of a distribution of decisions made by real people, as it is that the model has explanatory power about that distribution. people are incorporating an astonishingly vast array of information in their decision-making that is very unlikely to be considered by a rational economic model, so those "astonishing bullshit reasons" shouldn't be so surprising really if you don't conflate the modeled behavior of the population with that of the individuals.

nickff 12y ago
>"economists (particularly of the capitalist variety) certainly have a point of view that the economic utility function can be directly transformed into and represented by monetary value" Which economists have that point of view? Some have accused Smith of this, but it is plainly untrue, as made clear in his "Theory of Moral Sentiments".[1] Austrian economists such as Mises (who few would call socialist) criticized even the cardinal utility model, and argued that only lists of ordinal utilities are useful.[2] [1] http://en.wikipedia.org/wiki/The_Theory_of_Moral_Sentiments http://en.wikipedia.org/wiki/The_Theory_of_Moral_Sentiments [2] http://en.wikipedia.org/wiki/The_Theory_of_Money_and_Credit http://en.wikipedia.org/wiki/The_Theory_of_Money_and_Credit
- notahacker 12y ago
  The idea that an individual optimizes their trades to maximise utility relative to their initial allocation of resources - and that monetary values in the price system itself therefore reflects an aggregate of human attempts to maximise their utility through trade and production - is so orthodox in economics it doesn't need lists of supporters. von Mises is unusual in expressing the view that human utility cannot meaningfully be known and understood except through preferences expressed by [economic] action but that's merely a stronger version of the same principle that the price system is a way of linking people's preferences [purely ordinal, in von Mises' case] with a [symbolically cardinal] monetary value.

nickff 12y ago

>"economists (particularly of the capitalist variety) certainly have a point of view that the economic utility function can be directly transformed into and represented by monetary value" Which economists have that point of view? Some have accused Smith of this, but it is plainly untrue, as made clear in his "Theory of Moral Sentiments".[1] Austrian economists such as Mises (who few would call socialist) criticized even the cardinal utility model, and argued that only lists of ordinal utilities are useful.[2] [1] http://en.wikipedia.org/wiki/The_Theory_of_Moral_Sentiments http://en.wikipedia.org/wiki/The_Theory_of_Moral_Sentiments [2] http://en.wikipedia.org/wiki/The_Theory_of_Money_and_Credit http://en.wikipedia.org/wiki/The_Theory_of_Money_and_Credit

notahacker 12y ago
The idea that an individual optimizes their trades to maximise utility relative to their initial allocation of resources - and that monetary values in the price system itself therefore reflects an aggregate of human attempts to maximise their utility through trade and production - is so orthodox in economics it doesn't need lists of supporters. von Mises is unusual in expressing the view that human utility cannot meaningfully be known and understood except through preferences expressed by [economic] action but that's merely a stronger version of the same principle that the price system is a way of linking people's preferences [purely ordinal, in von Mises' case] with a [symbolically cardinal] monetary value.