Measuring Utility: From the Marginal Revolution to Behavioral Economics

345 Pages·2018·2.984 MB·English

by  Ivan Moscati

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Measuring Utility
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Oxford Studies in the History of Economics
Series Editor: Steven G. Medema, PhD,
University Distinguished Professor of Economics,
University of Colorado Denver
This series publishes leading- edge scholarship by historians of economics and social science,
drawing upon approaches from intellectual history, the history of ideas, and the history of
the natural and social sciences. It embraces the history of economic thinking from ancient
times to the present, the evolution of the discipline itself, the relationship of economics to
other fields of inquiry, and the diffusion of economic ideas within the discipline and to the
policy realm and broader publics. This enlarged scope affords the possibility of looking anew
at the intellectual, social, and professional forces that have surrounded and conditioned ec-
onomics’ continued development.
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Measuring Utility
From the Marginal Revolution
to Behavioral Economics
Ivan Moscati
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For Mila, Elia, Anita and, in memory, for my dad
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CONTENTS
List of Figures and Tables ix
Prologue 1
PART ONE: Utility Measurement in Early Utility Theories, 1870– 1910
1. When Unit- Based Measurement Ruled the World: An Interdisciplinary Overview,
1870– 1910 15
2. Is There a Unit of Utility? Jevons, Menger, and Walras on the Measurability of Utility,
1870– 1910 25
3. Still on the Quest for a Unit: Utility Measurement in Wieser, Böhm- Bawerk,
Edgeworth, Fisher, and Marshall, 1880–1 910 49
PART TWO:  Ordinal and Cardinal Utility and Early Empirical Measurements
of Utility, 1900– 1945
4. Fundamental Measurement, Sensation Differences, and the British Controversy
on Psychological Measurement, 1910– 1940 69
5. Ordinal Utility: Pareto and the Austrians, 1900– 1915 79
6. Cardinal Utility: How It Entered Economic Analysis from Pareto to Samuelson,
1915– 1945 95
7. Going Empirical: The Econometric and Experimental Approaches to Utility
Measurement of Frisch and Thurstone, 1925– 1945 117
PART THREE:  From Debating Expected Utility Theory to Redefining
Utility Measurement, 1945– 1955
8. Stevens and the Operational Definition of Measurement in Psychology,
1935– 1950 139
9. The Expected Utility Theory and Measurement Theory of von Neumann and
Morgenstern, 1944– 1947 147
10. What Is That Function? Friedman, Savage, Marschak, Samuelson, and Baumol on
EUT, 1947– 1950 163
11. From Chicago to Paris: The Debate Continues, 1950– 1952 177
12. Conventions, Operations, Predictions: Redefining Utility Measurement,
1952– 1955 193
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( viii ) Contents
PART FOUR:  Expected Utility Theory and Experimental Utility Measurement,
1950– 1985
13. Experimental Utility Measurement: The Age of Confidence I, 1950– 1960 217
14. Marschak and Utility Measurement at Yale: The Age of Confidence II,
1960– 1965 239
15. From Utility Measurement to the Representational Theory of Measurement:
The Case of Suppes, 1950– 1970 247
16. Measuring Utility, Destabilizing EUT: Behavioral Economics
Begins, 1965– 1985 261
Epilogue 281
Acknowledgments 285
References 289
Name Index 313
Subject Index 317
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FIGURES AND TABLES
FIGURES
7.1 Indifference curve elicited by Thurstone 126
10.1 Friedman and Savage’s utility curves and risk attitudes 167
13.1 Utility curve elicited by Mosteller and Nogee 221
13.2 Utility curve elicited by Davidson, Suppes, and Siegel 233
16.1 Utility curves elicited by Karmarkar 268
TABLES
2.1 Menger’s utility numbers 35
2.2 Forms of utility and forms of measurement 45