In the last part of the 18th century (1780-1800) a number of philosophers led
by Jeremy Bentham developed the
are sometimes referred to as
Bentham's basic premise was
humans seek pleasure and avoid pain.
His philosophy became
important to economists, insofar as it was used to explain consumer behavior.
His philosophy is the basis of what economists call
Bentham thought that one day scientists might be able to measure,
accurately, the satisfaction a human obtains from, say, consuming an
economic good, such as a slice of pizza.
(Remember the definition of
The science of the allocation of scarce resources for the
of human wants and needs.
Hunger is pain.
Eating a good
dinner is pleasure.
Eating a good dinner
Eating slices of
pizza provides a consumer with
In this context, utility is synonymous
Some things are more "useful" for satisfying wants and
needs than other things.
The more useful they are, the more utility they
Utility theory assumed that it might be possible to measure how
much satisfaction (utility) one could receive from each slice of Uno's pizza
that is eaten for dinner.
It turns out that we can't measure the utility, or
satisfaction, that a person gets from eating a slice of Uno's pizza.
it is possible to measure the satisfaction that they get
from eating a slice of pizza, we can develop a theory of consumer behavior
that is extremely fruitful, and that can explain a lot of human behavior.
newer theory, while based on utility theory, does not require we be able to
measure utility scientifically; all we have to do is watch what consumers do,
and they will reveal to us all we need to know to prove Bentham correct in his
It is called
revealed preference theory.
Let us create a table that represents the satisfaction that one consumer
obtains from eating pizza at Uno's.
Let us assume that eating slices of pizza
provides us with
, where a util is a unit of satisfaction.
utils are preferred to less utils, because utils are a measure of how satisfied
Table 12-1 shows the number of utils received by the consumer from
eating slices of pizza at Uno's
at one sitting
, or at dinner on one specific day.
He is viewed as the "godfather", or founder, of The University College of London, and a peer and colleague
of Adam Smith, Mill, and other great Classical Economists.
Note that the table might show different numbers of utils if, say, the person had eaten a big breakfast earlier
in the morning and a big lunch at noon.
And the table might show other different numbers of utils if, say, the
person hadn't eaten for days, and had been on a diet, and decided to go off the diet by going to Uno's.