IDEAS home Printed from https://ideas.repec.org/p/ins/quaeco/qf1205.html
   My bibliography  Save this paper

How cardinal utility entered economic analysis during the Ordinal RevolutionLength: 31 pages

Author

Listed:
  • Ivan Moscati

    (Department of Economics, University of Insubria, Italy)

Abstract

The paper shows that cardinal utility entered economic analysis during the Ordinal Revolution initiated by Pareto and not, as many popular histories of utility theory assume, before it. Cardinal utility was the outcome of a discussion begun by Pareto about the capacity of ranking transitions among different combinations of goods. The discussion simmered away during the 1920s and early 1930s, underwent a decisive rise in temperature between 1934 and 1938, and continued with some final sparks until 1944. The paper illustrates the methodological and analytical issues and the measurement-theoretic problems, as well as the personal and institutional aspects that characterized this debate. Many eminent economists of the period contributed to it, with Samuelson in particular playing a pivotal role in defining and popularizing cardinal utility. Based on archival research in Samuelson’s papers at Duke University, the paper also addresses an issue of priority associated with the mathematical characterization of cardinal utility.

Suggested Citation

  • Ivan Moscati, 2012. "How cardinal utility entered economic analysis during the Ordinal RevolutionLength: 31 pages," Economics and Quantitative Methods qf1205, Department of Economics, University of Insubria.
    • Handle: RePEc:ins:quaeco:qf1205
    as

    Download full text from publisher

    File URL: https://www.eco.uninsubria.it/RePEc/pdf/QF2012_05.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. R. G. D. Allen, 1935. "A Note on the Determinateness of the Utility Function," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 2(2), pages 155-158.
    2. Torsten Schmidt & Christian E. Weber, 2008. "On the Origins of Ordinal Utility: Andreas Heinrich Voigt and the Mathematicians," History of Political Economy, Duke University Press, vol. 40(3), pages 481-510, Fall.
    3. Luigino Bruni & Francesco Guala, 2001. "Vilfredo Pareto and the Epistemological Foundations of Choice Theory," History of Political Economy, Duke University Press, vol. 33(1), pages 21-49, Spring.
    4. Jean-Sébastien Lenfant, 2006. "Complementarity and Demand Theory: From the 1920s to the 1940s," History of Political Economy, Duke University Press, vol. 38(5), pages 48-85, Supplemen.
    5. E. H. Phelps Brown, 1934. "Notes on the Determinateness of the Utility Function: I," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 2(1), pages 66-69.
    6. F. Zeuthen, 1937. "On the Determinateness of the Utility Function," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 4(3), pages 236-239.
    7. Leonard,Robert, 2010. "Von Neumann, Morgenstern, and the Creation of Game Theory," Cambridge Books, Cambridge University Press, number 9780521562669, September.
    8. Nicola Giocoli, 2003. "Modeling Rational Agents," Books, Edward Elgar Publishing, number 2585.
    9. Jean-Sebastien Lenfant, 2012. "Indifference Curves and the Ordinalist Revolution," History of Political Economy, Duke University Press, vol. 44(1), pages 113-155, Spring.
    10. Ivan Moscati, 2007. "History of consumer demand theory 1871 - 1971: A Neo-Kantian rational reconstruction," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 14(1), pages 119-156.
    11. Torsten Schmidt & Christian E. Weber, 2012. "Andreas Heinrich Voigt And The Hicks-Allen Revolution In Consumer Theory," Economic Inquiry, Western Economic Association International, vol. 50(3), pages 625-640, July.
    12. Aldo Montesano, 2006. "The Paretian Theory of Ophelimity in Closed and Open Cycles," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 14(3), pages 77-100.
    13. Frank H. Knight, 1944. "Realism and Relevance in the Theory of Demand," Journal of Political Economy, University of Chicago Press, vol. 52(4), pages 289-289.
    14. Frank H. Knight, 1940. ""What is Truth" in Economics?," Journal of Political Economy, University of Chicago Press, vol. 48(1), pages 1-1.
    15. Paul A. Samuelson, 1937. "A Note on Measurement of Utility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 4(2), pages 155-161.
    16. George J. Stigler, 1938. "Social Welfare and Differential Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 20(3), pages 573-586.
    17. D. Wade Hands, 2010. "Economics, psychology and the history of consumer choice theory," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 34(4), pages 633-648.
    18. Hancock, Keith & Isaac, J E, 1998. "Sir Henry Phelps Brown, 1906-1994," Economic Journal, Royal Economic Society, vol. 108(448), pages 757-778, May.
    19. Vilfredo Pareto, 2008. "Summary of Some Chapters of a New Treatise on Pure Economics by Professor Pareto," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 67(3), pages 453-504, December.
    20. Harro Bernardelli, 1934. "Notes on the Determinateness of the Utility Function: II," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 2(1), pages 69-75.
    21. O. Lange, 1934. "The Determinateness of the Utility Function," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 1(3), pages 218-225.
    22. Gerhard Tintner, 1942. "A Contribution to the Non-Static Theory of Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 56(2), pages 274-306.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Amélie Fievet, 2021. "Decision over Time as a By-Product of a Measure of Utility: A Reappraisal of Paul Samuelson's "A Note on Measurement of Utility" (1937)," Post-Print halshs-03453458, HAL.
    2. Jean-Sebastien Lenfant, 2012. "Indifference Curves and the Ordinalist Revolution," History of Political Economy, Duke University Press, vol. 44(1), pages 113-155, Spring.
    3. Jean Baccelli & Philippe Mongin, 2016. "Choice-based cardinal utility: a tribute to Patrick Suppes," Journal of Economic Methodology, Taylor & Francis Journals, vol. 23(3), pages 268-288, July.
    4. Roberto Marchionatti, 2006. "At the origin of post-war mainstream of economics: On pareto’s influence on economic theory," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 53(4), pages 538-559, December.
    5. Olav Bjerkholt & Ariane Dupont, 2007. "Ragnar Frisch's Axiomatic Approach in Econometrics," Post-Print hal-01081715, HAL.
    6. Gerard Debreu, 1957. "Stochastic Choice and Cardinal Utility," Cowles Foundation Discussion Papers 39, Cowles Foundation for Research in Economics, Yale University.
    7. Giocoli, Nicola, 2011. "From Wald to Savage: homo economicus becomes a Bayesian statistician," MPRA Paper 34117, University Library of Munich, Germany.
    8. D. Wade Hands, 2012. "The Rise and Fall of Walrasian Microeconomics: The Keynesian Effect," Chapters, in: Microfoundations Reconsidered, chapter 3, Edward Elgar Publishing.
    9. Senderski, Marcin, 2014. "Ecumenical foundations? On the coexistence of Austrian and neoclassical views on utility," MPRA Paper 67024, University Library of Munich, Germany.
    10. Ruggero Paladini, 2014. "Da Bentham alla tassazione ottimale," Public Finance Research Papers 2, Istituto di Economia e Finanza, DSGE, Sapienza University of Rome.
    11. Luca Timponelli, 2021. "From Pareto to Bridgman: The Operational Turn of Samuelson, Sraffa and Leontief," Annals of the Fondazione Luigi Einaudi. An Interdisciplinary Journal of Economics, History and Political Science, Fondazione Luigi Einaudi, Torino (Italy), vol. 55(1), pages 303-328, June.
    12. Marek Hudik, 0. "Equilibrium as compatibility of plans," Theory and Decision, Springer, vol. 0, pages 1-20.
    13. John Chipman, 2006. "Pareto and contemporary economic theory," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 53(4), pages 451-475, December.
    14. Jean-Sébastien Lenfant, 2006. "Complementarity and Demand Theory: From the 1920s to the 1940s," History of Political Economy, Duke University Press, vol. 38(5), pages 48-85, Supplemen.
    15. Marek Hudik, 2020. "Equilibrium as compatibility of plans," Theory and Decision, Springer, vol. 89(3), pages 349-368, October.
    16. Norbert Hirschauer & Mira Lehberger & Oliver Musshoff, 2015. "Happiness and Utility in Economic Thought—Or: What Can We Learn from Happiness Research for Public Policy Analysis and Public Policy Making?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 121(3), pages 647-674, April.
    17. Edward R. Morey, 2018. "What are the ethics of welfare economics? And, are welfare economists utilitarians?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 65(2), pages 201-230, June.
    18. Drakopoulos, Stavros A. & Katselidis, Ioannis, 2017. "The Relationship between Psychology and Economics: Insights from the History of Economic Thought," MPRA Paper 77485, University Library of Munich, Germany.
    19. Stavros, Drakopoulos, 2021. "The Relation of Neoclassical Economics to other Disciplines: The case of Physics and Psychology," MPRA Paper 106597, University Library of Munich, Germany.
    20. Jimena Hurtado & Johanna Mick, 2011. "Utilitarianism and Economic Behavior. Looking for Benthamite Traces," Documentos CEDE 9251, Universidad de los Andes, Facultad de Economía, CEDE.

    More about this item

    Keywords

    Cardinal utility; Ordinal Revolution; Utility analysis; Utility measurement; Samuelson JEL Classification: B13; B21; B40; D11;
    All these keywords.

    JEL classification:

    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ins:quaeco:qf1205. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Segreteria Dipartimento (email available below). General contact details of provider: https://edirc.repec.org/data/feinsit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.