Murphy on Interpersonal Utility Comparisons
Bob Murphy has done a huge service by laying out clearly the economic reasoning behind my conclusions (here and here) that: (1) you can’t make interpersonal utility comparisons and (2) utility is ordinal, not cardinal.
His piece is not long and I recommend it to anyone who is interested in the discussion.
This paragraph sums up his point:
In the present blog post I’ll hit the key points in this dispute. To cut to the chase, I agree with David R. Henderson: The way economists use the term, “utility” is an ordinal concept, which expresses a subjective ranking, not an objective measurement. Therefore it makes no sense to say Jim gets more or fewer utils than Sally. Furthermore, the work of von Neumann and Morgenstern does not alter this basic fact: Whether we “believe in” cardinal utility has nothing to do with their demonstrations.
I will add one thing. In the various comments that people on my posts wrote, I got the impression that they think I’m making the point about interpersonal utility comparisons because I oppose government taking wealth from wealthy people and giving it to poor people. But that’s not why. I see this as a purely technical issue in economics, an issue that one should get right regardless of one’s views on forced distribution.
A little history here about the evolution of my views. I oppose government taking from the wealthy and giving to the poor unless the wealthy people first took it from the poor people. It’s also true that when, as an undergrad, I first read the point about not being able to make interpersonal utility comparisons, I was excited because it helped me make the case against forced distribution. (I don’t call it “redistribution” because to do so is to assume that someone “distributed” wealth in the first place. When Dwight Lee wrote the article “Redistribution” for my Encyclopedia, I persuaded him that therefore we needed to put the the word in quotes. You can see that in the print version but not in the on-line version.) But one of the goals of my professor Ben Klein at UCLA was to “knock my libertarianism out of me.” (Those are my words, not his, but I think he would agree that that is what he was doing.) It wasn’t that he necessarily wanted me to be less libertarian. It’s that he wanted me always to distinguish between my libertarian views and technical economics and he wanted me, further, to enjoy technical economics separately from whatever conclusions it led to. He succeeded. That’s why I hate bad arguments for my libertarian policy conclusions as much as I hate bad arguments for statist policy conclusions.
If a certain physicist thought Einstein was wrong and that you could easily go faster than light, it would be weird if he said on his pop blog, “You can’t sustain a solar system polity with rockets going five times faster than light, because eventually the fuel costs will be astronomical,” without at least giving a nod to the fact that many of his colleagues would think he is speaking nonsense.