Re: On Utility Theory

["Alan G. Isaac" <AISAAC@xxxxxxxxxxxx>]

Jamie, Two points of clarification.
i. I did not mean to introduce a notion of free will at all, much
less one at variance with physicalist metaphysics. I meant that
no one has found a way to talk usefully about human action
without treating it as the manifestation of desires and beliefs.
See for example the work of Donald Davidson.

ii. Let me restate that we agree that the issues surrounding
preference formation render the use of utility theory for
welfare analysis at least problematic and probably useless.
(Of course, that simply leaves us without a useful framework.)
My claim is that the neoclassical paradigm is a normative
model of rational behavior (in a limited domain).
I am trying to explain the attraction of economists and
others to the paradigm on the basis on this normative appeal.
I.e., we understand why individuals "ought" to behave as
predicted in this limited domain.

--Alan G. Isaac

On Sun, 13 Nov 1994 13:26:01 -0700 James K. Galbraith said:
>  1. On your assertion that "no one has found a way to talk about human
>action and discard these notions" of will, I would point out to you that
>Kurt Vonnegut clearly reports, I think in The Sirens of Titan, on cosmic
>surveys by Tralfamadorean explorers who report definitively that Earth is
>the ONLY planet on which they encountered the concept of "free will."
>
>  2. More seriously, your next two points are intricately interlinked. On
>the one hand, you want to include into utility theory a range of analyses,
>that purport to model preference change. On the other, you then aver that
>the merit of the theory lies in its normative implications, by which
>(correct me if I'm mistaken) I take you to mean the standard welfare results
>that under such-and-such conditions perfect competition leads to Pareto-
>approved outcomes... BUT, as my father argued long, long ago in The Affluent
>Society, theories of preference change fatally undermine the normative
>implications of utility theory as most economists conceive them. If
>preferences are not autonomous, what preferential standing does a currently
>existing set of such preferences have?