Interpersonal Comparisons of Utility

Definition

Health Economics

  • An influential book by Lionel (later Lord) Robbins (1898-1984) (Robbins, 1932) provided not only the most commonly met definition of economics that is still in use (see Economics) but also introduced into economics the highly influential distinction between normative and positive. In positive economics, making interpersonal comparisons of utility has been regarded, at least by economists influenced by logical positivism, as 'meaningless' partly on the grounds that one person's utility is not observable to anyone else and partly because making such interpersonal comparisons was held to involve ethics - and ethics, according to logical positivism, is scientifically meaningless. In welfare economics a similar ban on making interpersonal comparisons exists amongst staunch users of the Pareto criterion but on less clear grounds, since this seemed to deny welfare economics the possibility of addressing most practically relevant ethical issues in public policy (even Pareto himself did not hesitate to make them when necessary - as in policy judgments). Interpersonal comparisons are explicitly disallowed in the Arrow social welfare function, and Arrow himself described interpersonal comparisons of utility as having 'no meaning'. Thus, for example, policy measures to alleviate extreme poverty might be agreed to be highly desirable but they could not be Pareto improvements if they were to involve involuntary sacrifices by the rich (they might be actual improvements but the criterion could not say whether that was so).

    Yet people plainly have empathy and make interpersonal compari sons of subjective feelings and experiences all the time, especially within families and other groups having important things in common, and the 'states of mind' of others are not invariably invisible, though we may sometimes be deceived about them, nor is our objective behaviour uninfluenced by what we perceive others to feel. While several very distinguished economists have provided penetrating analyses involving interpersonal comparisons of utility many, however, still do their best to avoid analysis involving them while others make them, but implicitly.

    Health economists have tended to be far less squeamish regarding interpersonal comparisons than other economists, especially those adopting the extra-welfarist position, largely because health and the equity of its distribution lie at the heart of so much public policy and a concern on the economists' part that economics be able to contribute to the solution of the enormous resource allocation issues that arise in the field of health. This is not to suggest that it is any economist's business to make distributional value judgments; rather it is to suggest that their orderly discussion (by economists among others) in public policy debate is highly desirable and to the benefit of those whose business it is to make such judgments.

http://www.dictionarycentral.com/definition/interpersonal-comparisons-of-utility.html