Utility/Tutorials

The circularity of the concept of utility

The economist Joan Robinson has described utility as "a metaphysical concept of impregnable circularity" . She argued that the two statements:

the utility of X is why A buys it, and

the reason that we know that X has utility to A, is that he buys it.

taken together have no content, being no more than alternative ways of arranging words. The conventional statement that utility is the objective of all rational economic activity is similarly tautological - having no more content than a statement that rational people try to get what they want.

Those arguments are generally accepted, but the fact that such statements are tautological does not deprive them of usefulness. In Milton Friedman's words, they "serve as a filing system for organising empirical material". Utility is part of the language of economics, in much the same way that energy is part of the language of physics, and practising economists are accustomed to using it without worrying about its metaphysical character.