Marginal Utility

by Tom Bozzo

It's not too odd to see people land various places in the archives as search engine referrals drive a lot of the non-RSS traffic here. But most comments resulting from such referrals are, not surprisingly, attempts at comment spam (*). This one was a real comment asking a couple real questions:

I have read a number of books written by economist of law Richard A. Posner. The word utility is used often, for instance, we make choices based on their utility, that kind of thing, but I'm not quoting Posner there, that is rather my impression of what he is saying.

When psychologists talk of people's motivations, it frequently reminds me of the utility Posner references in his books. Last week, I asked the psychologists (in our Math and Cognition seminar): what is the relationship between what they are calling decisions of psychology and the utility discussed by economist Posner? They basically answered that utility is abstract. The psychology part is what we choose here and now independent of the abstract utility of the choice.

Further, one of the psychologists later said how much he enjoyed my comments about Posner and utilitarianism. Well, I never talked about utilitarianism, and here is my second, more important question: when economists speak of utility, that is not synonymous with utilitarianism, is it? Can't utility be looked at from the vantage point of many philosophical positions?

I'm answering this here in part because I'm not completely done with the study of Iraqi mortality due to the war by Burnham (et al.) in the Lancet, and I was going to pick on Judge Posner a bit. I'll note as a correction that Posner is more appropriately characterized as a lawyer who moonlights in economics and not an economist with an unusually strong interest in the law, but back to him later.

The psychologists seem to be telling you that the "rational choice" model of economics doesn't necessarily apply to a lot of actual decisions, and I think they're right. (The program, particuarly associated with Posner's co-blogger and quasi-Nobel laureate Gary Becker, of applying the rational choice model willy-nilly within what's traditionally been the province of sociology drives some of our blog-pals to shrill unholy madness, with some justification.) It's not that people don't necessarily have preferences of the sort formalized in utility functions, but we're under no particular obligation to have complete or mathematically well-behaved preferences. Experiments have claimed to show departures from the standard choice model, and other experimenters have claimed that the first group's results are a byproduct of their experimental protocols. My reading is that some economic decisions are made in ways that are observationally indistinguishable from the utility maximizing model, which may represent the behavior being trained in for certain situations. But we aren't utility calculators as a general matter.

As for the second question, the utility maximization model of microeconomics, and the microfoundations of macroeconomics, is not synonymous with utilitarianism. Utilitarianism's roots far pre-date the mathematical utility model, for one thing. You can develop a mathematical utilitarianism by way of social utility maximization, regarding which there is a fair body of economic theory, though you can find economists who will deny (at least in part) the necessary tradeoffs between individual and social welfare that the existence of well-behaved social utility functions usually imply.

Which brings us back to Posner, who lately has been making what I'm sure he considers utilitarian arguments that various of what might be thought of as our basic liberties should be curtailed to more effectively fight the War on Terra. (**) The argument, it seems, boils down to the claim that freedoms that are great in the abstract are no good to you if you're dead, and this is the basic sales pitch for the likes of the Torture Authorization Act and the parallel effort to legalize various forms of spying on citizens. Posner at least is more consistent in that he can grasp a utilitarian argument for, say, taxing wealth — even in the form of the irrationally-hated estate tax — whereas the typical Republican Senator can countenance torture of the not-provably-threatening but not taking a dollar out of the investment accounts of an already-dead rich person.

A propos of the Burnham et al. study, we note for the record the difference in the messages to citizens and to the poor suckers who are entitled to experience the "birth pangs" of the neocons' Middle East project. We are supposed to give up freedom for our own personal safety. They may get blown up in airstrikes while fleeing for their lives, caught in various forms of crossfire, or assaulted with power tools prior to an execution-style shooting, but hey at least Saddam Hussein's henchmen aren't the perps. A utilitarian case that it matters much who's torturing you to death, conditional on being tortured to death, is weak to say the least. So it matters, if the war is to be justified on humanitarian grounds, that the post-war anarchy not be a bigger nigthmare than what it replaced.

This is where war opposition meets clear-eyed pragmatism, against the starry-eyed fantasy of the stay-the-course set. The practical question remains, we paid thousands of lives and a half-trillion dollars for what?!

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(*) Subject to summary deletion per MU administration practice.

(**) Which will do nothing, of course, to make Posner a likelier candidate for the Big Show, ageism in Republican SCOTUS selections being rampant and young monarchists moreover being in ample supply.