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I'm familiar with utility functions, although I think they don't accurately reflect people's values; I think people's values more closely resemble a poset. But

I'm familiar with utility functions, although I think they don't accurately reflect people's values; I think people's values more closely resemble a poset. But even assuming a cardinal utility function, we run into the problem that money isn't all that widely fungible. I cannot buy friends, family, love, legal or social reform, etc., all of which must weigh heavily in many people's utility functions.

dragonwriter 12y ago
> I cannot buy friends, family, love, legal or social reform, etc., all of which must weigh heavily in many people's utility functions. The concept is that while you can't do so directly, the degree to which you value these things can in principle be quantified monetarily by the monetary value of the things you can buy with money that you are willing to forego in order to attain the things that cannot be bought with money, allowing money to be used as a tool to quantify utility even for things which it can't buy directly.
- alexbecker 12y ago
  I don't think that is consistent with preference being transitive, but I guess that's not a necessary assumption for most economic theory, only that it is cycle-free. If you model my preferences as a directed graph (say an edge A -> B exists if I can and will trade A for B), then in order to be able to use money as a proxy, every node must have a parent and a child which are both amounts of money. This seems unlikely to me.
  - dragonwriter 12y ago
    > I don't think that is consistent with preference being transitive Its certainly consistent with preference being transitive (since it is intimately tied in with cardinal utility, which is a much stronger position which includes transitive preference.) Transitive preferences in a poset aren't sufficient to support money-as-general-utility-scorecard, however.
    - alexbecker 12y ago
      Brain fart on my part, I was thinking about a different comment. I meant that it isn't consistent with people's observed preferences being transitive; if they are, then there is no need to make the inferences you suggest. But of course you were talking about things that can't be traded for money, not things that people refuse to because they value them more, so ignore my criticism. Actually, that makes me realize that I need to change the edge criterion in my previous comment.

dragonwriter 12y ago

> I cannot buy friends, family, love, legal or social reform, etc., all of which must weigh heavily in many people's utility functions. The concept is that while you can't do so directly, the degree to which you value these things can in principle be quantified monetarily by the monetary value of the things you can buy with money that you are willing to forego in order to attain the things that cannot be bought with money, allowing money to be used as a tool to quantify utility even for things which it can't buy directly.

alexbecker 12y ago
I don't think that is consistent with preference being transitive, but I guess that's not a necessary assumption for most economic theory, only that it is cycle-free. If you model my preferences as a directed graph (say an edge A -> B exists if I can and will trade A for B), then in order to be able to use money as a proxy, every node must have a parent and a child which are both amounts of money. This seems unlikely to me.
- dragonwriter 12y ago
  > I don't think that is consistent with preference being transitive Its certainly consistent with preference being transitive (since it is intimately tied in with cardinal utility, which is a much stronger position which includes transitive preference.) Transitive preferences in a poset aren't sufficient to support money-as-general-utility-scorecard, however.
  - alexbecker 12y ago
    Brain fart on my part, I was thinking about a different comment. I meant that it isn't consistent with people's observed preferences being transitive; if they are, then there is no need to make the inferences you suggest. But of course you were talking about things that can't be traded for money, not things that people refuse to because they value them more, so ignore my criticism. Actually, that makes me realize that I need to change the edge criterion in my previous comment.