Measuring Utility: From the Marginal Revolution to Behavioral Economics (Oxford Studies in History of Economics)

"Utility is a key concept in the economics of individual decision-making. However, utility is not measurable in a straightforward way. As a result, from the very beginning there has been debates about the meaning of utility as well as how to measure it. This book is an innovative investigation of how these arguments changed over time. Measuring Utility reconstructs economists' ideas and discussions about utility measurement from 1870 to 1985, as well as their attempts to measure utility empirically. The book brings into focus the interplay between the evolution of utility analysis, economists' ideas about utility measurement, and their conception of what measurement in general means. It also explores the relationships between the history of utility measurement in economics, the history of the measurement of sensations in psychology, and the history of measurement theory in general. Finally, the book discusses some methodological problems related to utility measurement, such as the epistemological status of the utility concept and its measures. The first part covers the period 1870-1910, and discusses the issue of utility measurement in the theories of Jevons, Menger, Walras and other early utility theorists. Part II deals with the emergence of the notions of ordinal and cardinal utility during the period 1900-1945, and discusses two early attempts to give an empirical content to the notion of utility. Part III focuses on the 1945-1955 debate on utility measurement that was originated by von Neumann and Morgenstern's expected utility theory (EUT). Part IV reconstructs the experimental attempts to measure the utility of money between 1950 and 1985 within the framework provided by EUT. This historical and epistemological overview provides keen insights into current debates about rational choice theory and behavioral economics in the theory of individual decision-making and the philosophy of economics."[Source éditeur] Cover 1 Series 3 Measuring Utility 4 Copyright 5 Dedication 6 Contents 8 List of Figures and Tables 10 Prologue 14 Part One: Utility Measurement in Early Utility Theories, 1870–​1910 26 1. When Unit-​Based Measurement Ruled the World: An Interdisciplinary Overview, 1870–​1910 28 2. Is There a Unit of Utility? Jevons, Menger, and Walras on the Measurability of Utility, 1870–​1910 38 3. Still on the Quest for a Unit: Utility Measurement in Wieser, Böhm-​Bawerk, Edgeworth, Fisher, and Marshall, 1880–​1910 62 Part Two: Ordinal and Cardinal Utility and Early Empirical Measurements of Utility, 1900–​1945 80 4. Fundamental Measurement, Sensation Differences, and the British Controversy on Psychological Measurement, 1910–​1940 82 5. Ordinal Utility: Pareto and the Austrians, 1900–​1915 92 6. Cardinal Utility: How It Entered Economic Analysis from Pareto to Samuelson, 1915–​1945 108 7. Going Empirical: The Econometric and Experimental Approaches to Utility Measurement of Frisch and Thurstone, 1925–​1945 130 Part Three: From Debating Expected Utility Theory to Redefining Utility Measurement, 1945–​1955 150 8. Stevens and the Operational Definition of Measurement in Psychology, 1935–​1950 152 9. The Expected Utility Theory and Measurement Theory of von Neumann and Morgenstern, 1944–​1947 160 10. What Is That Function? Friedman, Savage, Marschak, Samuelson, and Baumol on EUT, 1947–​1950 176 11. From Chicago to Paris: The Debate Continues, 1950–​1952 190 12. Conventions, Operations, Predictions: Redefining Utility Measurement, 1952–​1955 206 Part Four: Expected Utility Theory and Experimental Utility Measurement, 1950–​1985 228 13. Experimental Utility Measurement: The Age of Confidence I, 1950–​1960 230 14. Marschak and Utility Measurement at Yale: The Age of Confidence II, 1960–​1965 252 15. From Utility Measurement to the Representational Theory of Measurement: The Case of Suppes, 1950–​1970 260 16. Measuring Utility, Destabilizing EUT: Behavioral Economics Begins, 1965–​1985 274 Epilogue 294 Acknowledgments 298 References 302 Name Index 326 Subject Index 330 "Utility is a key concept in the economics of individual decision-making. However, utility is not measurable in a straightforward way. As a result, from the very beginning there has been debates about the meaning of utility as well as how to measure it. This book is an innovative investigation of how these arguments changed over time. Measuring Utility reconstructs economists' ideas and discussions about utility measurement from 1870 to 1985, as well as their attempts to measure utility empirically. The book brings into focus the interplay between the evolution of utility analysis, economists' ideas about utility measurement, and their conception of what measurement in general means. It also explores the relationships between the history of utility measurement in economics, the history of the measurement of sensations in psychology, and the history of measurement theory in general. Finally, the book discusses some methodological problems related to utility measurement, such as the epistemological status of the utility concept and its measures. The first part covers the period 1870-1910, and discusses the issue of utility measurement in the theories of Jevons, Menger, Walras and other early utility theorists. Part II deals with the emergence of the notions of ordinal and cardinal utility during the period 1900-1945, and discusses two early attempts to give an empirical content to the notion of utility. Part III focuses on the 1945-1955 debate on utility measurement that was originated by von Neumann and Morgenstern's expected utility theory (EUT). Part IV reconstructs the experimental attempts to measure the utility of money between 1950 and 1985 within the framework provided by EUT. This historical and epistemological overview provides keen insights into current debates about rational choice theory and behavioral economics in the theory of individual decision-making and the philosophy of economics."[Source éditeur] "The book reconstructs the history of utility measurement in economics, from the marginal revolution of the 1870s to the beginning of behavioral economics in the mid-1980s. Part I covers 1870-1910 and discusses the issue of utility measurement in the theories of Jevons, Menger, Walras, and other early utility theorists. Part II deals with the emergence of the notions of ordinal and cardinal utility during 1900-1945 and discusses two early attempts to give an empirical content to the notion of utility. Part III focuses on the 1945-1955 debate on utility measurement originated by von Neumann and Morgenstern's expected utility theory (EUT). Part IV reconstructs the experimental attempts to measure the utility of money between 1950 and 1985 within the framework provided by EUT. The book does four main things. First, it reconstructs in detail economists' ideas and discussions about utility measurement from 1870 to 1985 and their attempts to measure utility empirically. Second, it brings into focus the interplay among the evolution of utility analysis, economists' ideas about utility measurement, and their conception of what measurement in general means. Third, it explores the hitherto underresearched relationships among the history of utility measurement in economics, the history of the measurement of sensations in psychology, and the history of measurement theory in general. Finally, it discusses some methodological problems related to utility measurement, such as the epistemological status of the utility concept and its measures. The book closes with a brief overview of post-1985 research trends in utility measurement." -- Publisher's description. Since the marginal revolution of the 1870s, the economic theory of decision-making has been based on the notion of utility. Utility, however, is not measurable. This book reconstructs economists' struggles with issues related to utility measurement from the 1870s to the beginning of behavioral economics in the mid-1980s This text reconstructs the history of utility measurement in economics, from the marginal revolution of the 1870s to the beginning of behavioral economics in the mid-1980s