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In: Economics

A full page answer Where does our modern conception of utility theory come from?

A full page answer

Where does our modern conception of utility theory come from?

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Expert Solution

In the economic literature the term “utility” appeared quite early however its meaning has shifted continually. Initially utility had associated to usefulness. Therefore, Galiani (1750) defined the term as the capacity of a commodity to procure us felicity. For Bentham, too, utility referred to the property in any object that it tends to produce gain, advantage, pleasure, happiness or good. Economist Bentham, and to a big extent for Jevons, the utility was associated strongly with the pleasure enjoyed during the act of consumption. Gossen (1854) and Edgeworth (1881) minimized everything to the pleasure alone.

It is with Jevons (1871) that the term utility no longer was no longer refer to an intrinsic quality of a thing however meant as the sum of pleasure and the pain prevented with it's usage. Into the economic literature the new meaning of utility slowly began creeping long before Jevons. The first switch occurred in Bentham’s works when the economist used the term both in its old approach and in the approach of the “principle of utility,” which means, the principle of organizing society with a traget to achieve “the greatest happiness of the greatest number.” Economist Jevons stated, “value in use = total utility,” and economist Pareto wrote that “utility” is another word for “value in use.” No doubt “value in use” senses better the modern conception of utility theory.


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