Economics without normative conclusions is just statistics.

No it isn't. It is just economics that is less irritating. Economics can conclude "If you want X then you should do Y". This is obviously most useful for people who have consequentialist ethics and happen to desire Y but these preferences are best considered to be attributes (probably) held by the economists and not by economics itself.

A trap I have noticed some economists falling into is reasoning "Z is something that probably will happen therefore Z is something that should happen". This tends to invoke my contempt, particularly since it is seldom applied consistently.

Economics can conclude "If you want X then you should do Y".

This is what economists are trying to do now. Yet, implicit in their advice are normative economic principals that comprise the set list of X: Full employment, lower inflation, lower taxes, higher revenue etc...Obviously whoever wants x is normatively seeking a solution. As a result the analysis must then also and it is implicit in the formulation.

The economists themselves may have no feelings one way or another but they are using the economic and statistical principals toward normat... (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.