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Interpersonal Comparisons of Utility for 2 of 3 Types of People

Abstract

It is argued that a natural solution exists to carrying out interpersonal comparisons of utility when an ordinary theory of preferences among binary uncertain alternatives is supplemented by, and interlocked with, a commutative, ordered group operation of joint receipts -- of receiving two goods at the same time. These concepts, with quite ordinary behavioral assumptions about them, lead to the existence of 3 types of people. A simple behavioral criterion is given for classifying people into these classes. At this point, their relative sizes are unknown, although one can speculate. For 2 of the types there is a multiplicative representation of joint receipts. In contrast to most utility theories, these utility functions form absolute scales. That fact makes possible, at least in principle, meaningful interpersonal comparisons of utility with desirable properties such a transitive comparisons, thus resolving a long standing philosophical problem. Potentially, this has important implications in economics once suitable xperimental/observational procedures are devised.



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