Note: I didn't write this essay, nor do I own the blog where it came from. The essay text is displayed below this line.
Economists and other social theorists often take the concept of utility for granted.
In theory, utility is a measure of value. I will denote the utility of X to Y as U(X, Y) or simply U(X) if Y is clear in the context. For a single individual, we can think of utility as a mathematical function that maps objects or outcomes to points on the continuum. This mapping is called a “utility function”. (In this context, “function” has its mathematical meaning, not its ordinary meaning.)
To think about society, we might want to define utility for a group, not just a single individual. Collective utility is typically defined as the sum of individual utility over the collective. This assumes that utility is defined on the same scale for everyone.
The concept of utility is used to model individual and social decision-making. It is used in game theory to define benefits and costs. It is often used in moral philosophy to define the “goodness” of actions and outcomes. In a utilitarian moral theory, collective utility is the measure of goodness, and we have a moral obligation to act in ways that increase it. In economics, it is often assumed that prices measure the utility of goods and services. GDP is often viewed as a measure of collective utility for a society.
The concept of utility is based on an underlying metaphor: thinking of value as a substance. A substance can be quantified, measured, compared, summed over a collection, exchanged, produced, consumed, etc. Metaphorically, we think of U(X, Y) as defining a quantity of a substance that is present in X. We say “How much value does X have?”, as if value is a substance contained in X. We talk about how much value a company produces, or an entire economy produces, as if value is a substance that we produce and consume.
Does this metaphor make sense? Is value like a substance?
In this essay, I will argue that the concept of utility is a convenient fiction.
Utility can be defined in different ways:
- Reproductive utility: U(X, Y) is how much X contributes to the reproductive fitness of Y.
- Desiric utility: U(X, Y) is how much Y psychologically values X.
- Hedonic utility: U(X, Y) is the net effect of X on Y’s experiences of pleasure and pain.
- Energetic utility: U(X, Y) is the amount of work that Y would do for X.
- Monetary utility: U(X, Y) is the amount of money that Y would pay for X.
Let’s consider each of these definitions.
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Armchair economists and EAs even more so. Take for granted, and fail to document WHICH version of the utility concept they're using.
For me, utility is a convenient placeholder for the underlying model that our ordinal preferences expressed through action (I did X, meaning I prefer the expected sum of value of outcomes likely from X). Utility is the "value" that is preferred. Note that it's kind of a circular defining - it's the thing that drives decisions, proven by the fact that actions take place.
More expansive uses of the term come about by forgetting that this definition doesn't carry much information about anything. It would be nice if we could find underlying consistent preferences, and this would be a good term for the unification of them. And if they're long-term consistent preferences, maybe it should add up over time to explain time-preferences. And if everyone is equal, then clearly we can sum this thing up to get a group value.