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

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  • 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
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    File URL: http://eco.uninsubria.it/dipeco/quaderni/files/QF2012_05.pdf
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    References listed on IDEAS

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    1. R. G. D. Allen, 1935. "A Note on the Determinateness of the Utility Function," Review of Economic Studies, Oxford University Press, 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," Review of Economic Studies, Oxford University Press, vol. 2(1), pages 66-69.
    6. F. Zeuthen, 1937. "On the Determinateness of the Utility Function," Review of Economic Studies, Oxford University Press, 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.
    8. Nicola Giocoli, 2003. "Modeling Rational Agents," Books, Edward Elgar Publishing, number 2585.
    9. 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.
    10. 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.
    11. 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.
    12. Frank H. Knight, 1944. "Realism and Relevance in the Theory of Demand," Journal of Political Economy, University of Chicago Press, vol. 52, pages 289-289.
    13. Jean-Sebastien Lenfant, 2012. "Indifference Curves and the Ordinalist Revolution," History of Political Economy, Duke University Press, vol. 44(1), pages 113-155, Spring.
    14. D. Wade Hands, 2010. "Economics, psychology and the history of consumer choice theory," Cambridge Journal of Economics, Oxford University Press, vol. 34(4), pages 633-648.
    15. Hancock, Keith & Isaac, J E, 1998. "Sir Henry Phelps Brown, 1906-1994," Economic Journal, Royal Economic Society, vol. 108(448), pages 757-778, May.
    16. O. Lange, 1934. "The Determinateness of the Utility Function," Review of Economic Studies, Oxford University Press, vol. 1(3), pages 218-225.
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    More about this item

    Keywords

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

    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

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