Interpersonal Comparisons of Utility

From: Rod Peet

Sent: Sunday, July 12, 2020 6:08 AM

To: Walter Block <wblock@loyno.edu>

Subject: Comparisons of utility

Dear Walter,

Your recent writing on interpersonal comparisons of utility prompted a question in my mind that I think is related to this. And may actually have been answered in your writing. If so I overlooked it. Your examples have two parties involved. What if there is a third party?

If I trade my watch for your tie we are both better off. We each obtained something we valued more that what we gave up. Is society better off? Has wealth increased even though nothing new was created?

And does it follow that any intervention in the transaction by a third party diminishes whatever new wealth might have been created?  Especially since that third party will demand a fee for his “services”. I think this negates any claim by the government that it can improve people lives.

Thank you for not only providing a wealth of information but showing how to think about it. You have increased my wealth enormously even though we have exchanged nothing but words.

Regards,

Rod Peet, Jr.

Dear Rod:

I don’t think that bringing a third person into the mix changes the principle, and interpersonal comparisons of utility are invalid. But, it’s good to bring in this new dimension.

Best regards,

Walter

here’s a bit of a biblio for you:

Barnett, 2003; Gordon, 1993; Herbener, 1979; Rothbard, 1997

Barnett, William II. 2003. “The Modern Theory of Consumer Behavior: Ordinal or Cardinal,” Quarterly Journal of Austrian Economics; Vol. 6, No. 1, Spring, pp. 41- 63. http://www.mises.org/journals/qjae/pdf/qjae6_1_3.pdf

Gordon, David. 1993. “Toward a Deconstruction of Utility and Welfare Economics,” The Review of Austrian Economics, Vol. 6, No. 2, pp. 99-112; http://www.mises.org/journals/rae/pdf/RAE6_2_4.pdf

Herbener, Jeffrey M. 1979. “The Pareto Rule and Welfare Economics,” Review of Austrian Economics, Vol. 10 Num. 1, pp. 79-106; http://www.mises.org/journals/rae/pdf/RAE10_1_4.pdf

Rothbard. Murray N. 1997 [1956]. “Toward a Reconstruction of Utility and Welfare Economics.” reprinted in “The Logic of Action” Vol. I. Lyme, NH: Edward Elgar. pp. 211-254; http://www.mises.org/rothbard/toward.pdf

Dear :

Best regards,

Walter

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2:28 am on September 16, 2020