• noun a theory, propounded by Jeremy Bentham, that policies and institutions should be judged by how good they are for the people. His slogan was the greatest good of the greatest number.

Health Economics

  • (written as Utilitarianism)

    This is the ethical doctrine, a variant of which underlies nearly all welfare (and some extra-welfarist) economics, which specifies utility as the principal morally good characteristic of society - what humankind as a whole ought to maximize. The moral slogan for a society (of given population) to pursue under utilitarianism is 'the greatest utility for the greatest number'. Under utilitarianism, that which is right is any action or arrangement whose consequences are good in the sense of increasing total utility measured as the sum over all people of each person's individual utility. Hence utilitarianism is a consequentialist moral theory. 'Rule utilitarianism' maintains that a code or rule of behaviour is morally right if the consequences of adopting it are more favourable for total utility than not adopting it. 'Act utilitarianism' maintains that the morality of an action is determined by the balance of the favourable or unfavourable consequences in terms of utility that flow from it.

    Utility is usually thought of as an indication of the strength of a pref- erence. The view that policy ought to be based on individuals' preferences has a long history. Amongst its attractions are the idea that 'everyone counts' in the sense that everyone's utility is treated equally or, in a variant (maximin) form, that the social goal ought to be to maximize the utility of the least well off individual. A less attractive feature is that some people have utterly disgusting preferences.

    The classical economists treated utility as a cardinal entity accruing to individuals, which could be added up (like their weights). Since the 1930s welfare economics has tended to shy away from the interpersonal comparisons of utility (on the somewhat odd ground that it is 'meaningless' to compare them, when everyone ordinarily compares such things on a daily basis) in favour of the Pareto criterion under which a change is judged to be a social improvement only when no one loses utility from it (this does not imply that other changes are not social improvements; only that one cannot say whether they are). Pareto himself, however, used cardinal and interpersonal comparisons of utility whenever he felt it necessary to do so.

    Utility theory has also tended to treat utility as measured by linear in struments (like temperature), which enable one to distinguish rising or falling increments of it (marginal utility). Considerable controversy attaches both to the question of the people whose utility is to be 'counted', the ways in which the utilities accruing to different people are to be 'added up' or compared, and the character of the entities that are deemed to yield utility or disutility. Goods and services are always 'in' but the following are not always allowed - to illustrate a few possibilities - prospects of consuming goods and services, the relative consumption of goods and services by others, the distribution of goods and services generally, characteristics of goods and services, consumption by others, others' utility, the means of acquisition of goods and services, the processes of change as ownership bundles change, characteristics of people such as their health and cognitive skill, and capabilities of people like their talent for survival. The high priests of utilitarianism were Jeremy Bentham (1748-1842) and John Stuart Mill (1806-73) (who may have coined the term 'utilitarianism').