William Peden
Erasmus University Rotterdam
In late-nineteenth-century economics, there was an epoch-defining shift from the labour theory of value to the marginal utility theory of value. According to the latter, the economic value of some circumstance (obtaining some good, some service, and so on) is its subjective utility at the margin. Thus, while there is an absolute sense in which I prefer having water to having diamonds, at the present moment I value one more unit of diamonds more than I value one more unit of water. That is why I am willing to pay a higher price for a bowl of diamonds than a bowl of water of the same size, even though water is ‘more valuable’ in a sense. While the marginalists resolved a large array of anomalies that had troubled the labour theory of value, they also believed that utility should be measurable if their theory was to be scientifically respectable. Taking this shift as his starting point, Ivan Moscati has provided a well-written, thorough, and insightful account of the history of utility measurement from 1870 to 1985.
Keywords Utility Theory  Decision Theory  Bayesianism  Philosophy of Economics  Measurement
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