The description you gave of economic theory completely ignores the origins of micro and macro economics, price theory and comparative economics.

The assumptions that underlie these disciplines are normative.

Steve Levitt's finding that the availability of abortion caused a lagged decrease in crime.

Actually that is descriptive statistics. Just as I pointed out before - economics without normative conclusions is statistics.

Doubtful, but in your undergrad you might have read one of the following:

Adam Smith's Theory of Moral Sentiments

John Maynerd Keynes' General Theory of Employment

John Kenneth Galbraiths Affluent Society

Marx' Kapital

Even more doubtful Friedman or Rothbard

These are all philosophical works and serve as the foundations for the economics discipline. All detail first theories about how markets form and work, and second how to make these markets more efficient based on their own unique goal seeking behavior.

More than likely however you predominately used the Baretto Howland Econometrics, Joe Mankiw's Microeconomics, Paul Krugman's International Economics or some other such text which does not describe the assumptions which developed the theories behind standard economic concepts. Yes, full employment is in fact a normative conclusion.

I do not dispute that there is a significant descriptive aspect to economics, especially at the undergraduate level - Once you start to actually do economic analysis in real life, and public policy is a blatantly example, it becomes clear that it is indeed normative.

This discussion got off track however. What we are discussing now does not really add to the discussion at hand, and that is arguably of my own doing because I brought the point up. My reply originally was an attempt to refute a false dichotomy and perhaps I did not do a well enough job of pointing that out. So let me do that now.

Utilitarianism as developed and introduced by Bentham was devised as a way to measure the unitless "utility" for the ends of driving normative change towards hedonistic goals. It is possible to divorce the method from it's origins and use the formulaic theory to simply describe a preference set. Doing this however only gives us a statistical metric firmly in the realm of mathematics, something which requires little knowledge of markets. Economists have used utility in both manners, more heavily using the latter in recent decades. Thus if you are using utilitarian theory normatively you are truly using the original economic theory, not simply the statistical methodology which was birthed from it.

People around here seem to use the terms interchangeably without proper context. When I see someone here say "maximize utility" either you you using Bentham's hedonistic calculation method in which the goals are implicit and you mean maximize hedonistic happiness, OR you are using the divorced economic mechanization and are incoherent because you have not defined your goal seeking terms.

However interesting the question of origins in economics is, I was under the impression that we were talking about how it currently works, not how it was conceptualized decades and centuries ago.

I'd be fascinated to hear why you thought it doubtful that I've read those books (most happen to be included in the University of Chicago's core reading requirement, and Friedman and Rothbard are obviously connected to the school); perhaps I'm insufficiently aware of the quality of economics education elsewhere. It's just that none of those are being used in mod... (read more)

The Difference Between Utility and Utility

by Matt_Simpson 1 min read2nd Dec 200916 comments


Recently I argued that the economist's utility function and the ethicist's utility function are not the same.  The nutshell argument is that they are created for different purposes - one is an attempt to describe the actions we actually take and the other is an attempt to summarize our true values (i.e., what we should do).  I just ran across a somewhat older post over at Black Belt Bayesian arguing this very point.  Excerpt:

Economics (of the neoclassical kind) models consumers and other economic actors as such utility maximizers... Utility is not something you can experience. It’s just a mathematical construct used to describe the optimization structure in your behavior...

Consequentialist ethics says an act is right if its consequences are good. Moral behavior here amounts to being a utility maximizer. What’s “utility”? It’s whatever a moral agent is supposed to strive toward. Bentham’s original utilitarianism said utility was pleasure minus pain; nowadays any consequentalist theory tends to be called “utilitarian” if it says you should maximize some measure of welfare, summed over all individuals... Take note: not all utility maximizers are utilitarians.

There’s no necessary connection between these two kinds of utility other than that they use the same math. It’s possible to make up a utilitarian theory where ethical utility is the sum of everyone’s economic utility (calibrated somehow), but this is just one of many possibilities. Anyone trying to reason about one kind of utility through the other is on shaky ground.