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Intuitions About Lagrangian Optimization


  • Dan Kalman

    () (Department of Mathematics, American University)

  • Michael Hoy

    () (Department of Economics,University of Guelph)


We expose a weakness in an intuitive description popularly associated with the method of Lagrange multipliers and propose an alternative intuition. According to the deficient intuition, the Lagrange technique transforms a constrained optimization problem into an unconstrained optimization problem. This is both mathematically incorrect, and in some contexts contrary to a basic understanding of economic principles. In fact, as is probably understood by most instructors, solutions to the Lagrange conditions for a constrained optimization problem are generally saddle points, an observation typically included in advanced treatments of mathematical economics. At the introductory level, however, instructors often ‘cut corners’ and emphasize that the first-order conditions associated with the method of Lagrange multipliers are essentially the same as for an unconstrained optimization problem, hence leading to an incorrect intuition. We propose an alternative intuition that introduces the Lagrangian function as a perturbation of the original objective function. We characterize a constrained optimum as a point at which all the derivatives of a suitable perturbation must vanish. The paper is both useful for instructors of introductory courses in mathematical methods for economics and also can be used to provide enrichment to students for this very important mathematical technique.

Suggested Citation

  • Dan Kalman & Michael Hoy, 2010. "Intuitions About Lagrangian Optimization," Working Papers 1003, University of Guelph, Department of Economics and Finance.
  • Handle: RePEc:gue:guelph:2010-3.

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    References listed on IDEAS

    1. Klaus Ritzberger, 2008. "A Ranking of Journals in Economics and Related Fields," German Economic Review, Verein für Socialpolitik, vol. 9, pages 402-430, November.
    2. Pantelis Kalaitzidakis & Theofanis P. Mamuneas & Thanasis Stengos, 2003. "Rankings of Academic Journals and Institutions in Economics," Journal of the European Economic Association, MIT Press, vol. 1(6), pages 1346-1366, December.
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    More about this item


    Constrained optimization; Lagrange method; Transformation fallacy;

    JEL classification:

    • A2 - General Economics and Teaching - - Economic Education and Teaching of Economics
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics

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