The Futility of Utility

Abstract

The Utility Theory, which forms the fundamental framework of a significant area of economic science devoted to the study of consumer behaviour, has always been met with objection and criticism from many economists and it continues to do so. The inability to quantify utility and the dubiousness of the comparative evaluation of different consumer combinations of goods continue to give rise to attempts to supplement, amend or improve the existing theory of supply and demand. Such attempts should be recognized as reasonable and necessary, as many people reading the extensive literature on the utility theory are certain that they are reading a psychology textbook. One of the possible alternatives of the utility theory is an attempt to view consumer behaviour in the same way as producer behaviour. In my opinion, dividing economic agents into consumers and producers is a grave error. This division is not only capable of raising a number of questions among students and specialists, but it could also give rise to such a psychological phenomenon as split personality. During working hours an entrepreneur attempts to obtain the maximum profit possible and in the evening in the shopping centre, he or she attempts to maximize utility. Furthermore, he or she will have to continuously solve a rather difficult task capable of putting many people in a dead-end situation: is the purchased item a normal consumer item or a means of production? What should be maximized: profit or utility? It is evident that the consumer behaviour theory continues to remain open to criticism and requires considerable amendments, which is the reason for this essay.