Topic: Economics
UChicago Students: Utility is Irrational, Thus Economics is Irrational Confidence Inflation provides an incentive for uninformed students to make comments like this.by Christopher Espinal
(Conservative)
Thursday, January 17, 2008
God I hate the cold! But I sure hate standing in a super condensed bus a lot more. This is the reason why I chose to walk to my dorm today in Chicago's weird and excruciating weather. While shaking from extreme winds that overwhelm the skin on my face and everything one inch deep, I unwillingly listened to two University of Chicago undergrad students loudly talk rubbish. People think that us UChicago students are smart. I'd rather say we speak with an art of deception, using profound vocabulary, simultaneously demonstrating an exceptional sense of confidence and pride. This experience walking home made me really think about UChicago students as a whole.
According to the gentlemen with long hair maintained in an unkempt fashion, and the other with a lack of taste in clean clothing, "Economics is based on utility, and utility is irrational." Presumably, like most people who dress like them on the left, I believe they mean to say that pursuing maximum utility is all that economists have to spew in their boring subject. Besides my extremely judgmental opinion of their egregious appearance, I completely despise their normative statement which lacks true judgment or positive analysis.
Firstly, everything harkens back to definitions. Economics, as defined in its most pure form, discusses the allocation of scarce resources. People all have different views as to approaching this problem of resource scarcity. Karl Marx insisted on the state solving this problem, whereas Adam Smith believed that markets react to this issue much more responsibly. Of course we have theorists in between as John Maynard Keynes and John Kenneth Galbraith. Marx despised a utilitarian view of society and so he wrote his numerous complex pieces on utility and capital (all as a response to John Stuart Mill). Economics doesn't always aim to explain which policies or actions represent the most utility. Rather, economics may entail policies or actions aimed to benefit the greater good. Had maximum utility been at the core of these policies they would not exist, as most government policies "towards the greater good" have inefficient, or not so utile outcomes.
I find it much better to explain economics as a confrontation with many choices coming in many variations due to tradeoffs. These choices relate to a scarcity of resources. Thus, utility doesn't represent the only facet of economics. Sometimes individuals willingly give up the choice with the most utility to help others. Economist Paul Krugman votes democratic so that inherently inefficient bureaucracies can take his money and transfer it to initiatives that make people lazy. He would rather have the less socially utile option imposed on him by government. It's a tradeoff. Now that is what economics talks about.
As a personal view should we consider utility irrational? Should we say that to follow the option that best benefits our position to be irrational? In the cold Chicago weather, I wear warm clothing that provides me with the most utility in that condition. I guess now I should run around naked since that decision is irrational. Is it wrong to say that we should provide incentives for individuals to work instead of reward their stagnant and nonproductive lives? Should we raise wages for employees who never exhibited an improvement in their human capital or productivity?
Is it right to bar pedophiles from touching young incompetent and defenseless children so that pedophiles get maximum utility from their time? Now you may have a point. But remember, most economists believe in government roles in society with the exception of weird looking anarchists.
So what drives these ill-clothed imbeciles to agree on such nonsense? I believe it has much more to do with arrogant people talking about issues outside of what they know. When a person believes that they are so smart and never wrong, which I believe is a result from the confidence garbage injected into their brains by the University community, she/he will develop an incentive to comment on matters she/he don't fully comprehend. They then form an impetuous desire to be impartial and join political movements. That is how hippies fuel their campaign for a "better future." Arrogance!
Moral of the story: know the art of the war you are fighting and then attack!
Did you like this article? If you did, Thumb It! 5 thumbs so far
2008 Christopher Espinal, all rights reserved.
Published: Thursday, January 17, 2008
Last modified: Thursday, January 24, 2008
The views expressed in this
article are those of Christopher Espinal only and do not represent
the views of Nolan Chart, LLC or its affiliates. Christopher Espinal is
solely responsible for the contents of this article and is not an
employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.
Presumably, like most people who dress like them on the left, I believe they mean to say that pursuing maximum utility is all that economists have to spew about in their boring subject.
By all standards of logic, this one sentence suffers from the fallacy of loaded words and Argumentum ad Consequentiam. The rest of the essay is simply incoherent, which is demonstrated in the conclusion where somehow the persons referenced
...then form an impetuous desire to be impartial and join political movements.
Wow. When are the cows coming home to roost?
Moral of the story: know the art of the war you are fighting and then attack!
Posted By: Christopher Espinal
Date: 2008-01-24 17:45:47
I bet you don't even understand the point of this story. The point is that people don't even understand economics yet go on political rages. If you have read my other stuff....I take swaps at those on the right as well.
Sorry Carole that you took this personally. I bet if this story were exclusively about those on the right you wouldn't even call it "incoherent." Are you one of the people that I was writing about!?
Economics IS based on utility. The demand curve is derived directly from your preferences, based on the utility you derive from an economic activity.
If utility were rational, it would be possible to predict with mathmatical accuracy. What drives each of us is different and much of it has no basis in logic.
Taking exception to their statement is as irrational as taking exception to their clothing. I guess you didn't get much utility from your walk.
Posted By: Christopher Espinal
Date: 2008-01-27 22:06:44
Economics is based on decision making with a pool of scarce resources. We can go about this in a fairness way, or an efficient way. The former is not about utility, but about everyone having access to such resources. The latter is about Utility, where we derive our actions on what provides maximum utility. So yes, from a market perspective it is about utility. No, not from the perspective of an economy that wishes to have equal distribution.
If Mr. Espinal would like to check any economics text book, he would see that the demand curve is directly derived from a preference curve that measures the utility derived from one activity as compared to all other choices.
One can analyse that information based on fairness or efficiency, but you cannot disagree with how the information is reached mathmatically, or the relevance of the information. Supply and demand is the basis of economics.
Posted By: Christopher Espinal
Date: 2008-01-31 01:26:59
If Mr. Eric read his textbook carefully he would realize that supply and demand doesn't necessarily have to do with maximum utility. Firstly, he would realize that supply demand has much to do with scarcity and not necessarily with utility. He would realize that Policy isn't necessarily aimed towards maximum utility. He would realize that most textbooks explain things with the market as the primary basis to make decisions, by using prices to allocate resources. They only write in this manner because they are written by capitalists not communists. No wonder why he thinks utility is the basis of everything. If Mr. Eric understood what equity was, as opposed to efficiency, he would realize that it has little do with utility. He would also understand that the reason why PRICE's exist are to demonstrate utility to CONSUMERS. In communism, a place where consumers can't put prices on items, or societies with full equity central to policy, governments allocate resources.
Mr. Eric would also understand the reason why this proves that there is a TRADEOFF between efficiency and fairness.
I think that prices are not determined by the utility or usefulness of something. Price comes from the amount of time or effort it took the producer to make it and the consumers estimation of how much time or effort he has saved himself by purchasing it rather than making it. Air has great utility to people but it does not cost anyone any effort and noone has to provide a service to me to breathe that i cannot provide for myself so it is free. If on the other i was under water and someone brought me an airtank they would be rendering me a service that i could not provide for myself so there is value in that even though the utility is the same.
"He would understand that consumers use prices to demonstrate the utility of specific resources"
Chris I am not an expert I just have a question about Utility. I think that prices would be determined by the value that consumers place on specific resources or products not just the utility alone of the resources. Water has great utility but the price alone is not determined by how utile it is. It is determined by the value the consumer places on the service he is rendered by receiving the water. If i lived next to a stream i would pay less for someone to bring me water than if i lived in a desert even though the utility of the water is the same.
I agree with a lot of the things you said in your article and in your comments. I dont understand how derived demand would refute what i was saying about determination of prices. From what I understand derived demand simply means that if there is a demand for a good such as beer then it will create an indirect demand for Barley and hops. If there is a direct demand for jewelry then there may be a derived demand for gold. But the value of gold is not based on the Utility that the consumer finds in gold. The price is determined by a combination of utility, labor, scarcity.
Posted By: Christopher Espinal
Date: 2008-03-27 22:01:34
I'll let you think this one through. Derived demand says that people are the ones who determine the value, and thus prices of items or resources. Thus, demand is a derivative of the market in action.
Want to comment on this
article? Leave your comment here. Your email address is
required to track your comment. However, we will neither
publish your email address nor distribute it to other
organizations or persons. The only reason we might use
it would be if we needed to contact you regarding your
comment. All comments are subject to our
terms of use policy.
2008 Christopher Espinal, all rights reserved.