# Utility

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• #17128
tripzero.kev
Member

I was listening to Walter Block’s MisesTV seminar on Austrian Critique of Mainstream Economics on youtube when I got to the part where Block talks about cardinal utility vs ordinal utility. Block (and I think he gets this assumption from Rothbard) criticizes the notion that cardinal utilities can be mathmatically deducted to form meaning. Like saying his tie is 1/4 as important as his pen. However the definition on wikipedia states that ” One is not entitled to conclude, however, that the cup of tea is two thirds as good as the cup of juice, because this conclusion would depend not only on magnitudes of utility differences, but also on the “zero” of utility.” In other words, you aren’t allowed to derive such conclusions.

Are Block/Rothbard misstating the theory or am I confused?

#17129
jmherbener
Participant

The argument is that choosing between two alternatives only requires a person to rank them in order of value. The chosen option is preferred to the option not chosen.

To choose between two alternatives does not require a person to assign cardinal numbers to the amount of utility received from each alternative. Option A generates 10 units of utility and option B only 6 units of utility. Most economists (not just Block, Rothbard, and others Austrians) reject cardinal utility as such.

In 1954, Gerard Debreu, a famous French economist, showed that it is possible to represent an ordinal rank with a cardinal utility function under certain assumptions. In this conception, one cannot say that a tie is 1/4 as valuable as a pen (even if the tie has 4 utils of utility and the pen has 16 utils) because the different cardinal numbers only represent ordinal ranks.

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