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In economics, utility is a measure of a certain person's satisfaction from a certain state of the world. Over time, the term has been used with at least two meanings. In a normative context, utility refers to a goal or objective that we wish to maximize, i.e., an objective function.
The word utility is used to mean general well-being or happiness, and Mill's view is that utility is the consequence of a good action. Utility, within the context of utilitarianism, refers to people performing actions for social utility. By social utility, he means the well-being of many people.
In contrast to enlightened self-interest is simple greed, or the concept of "unenlightened self-interest", in which it is argued that when most or all persons act according to their own myopic selfishness, the group suffers loss as a result of conflict, decreased efficiency and productivity because of lack of cooperation, and the increased expense each individual pays for the protection of ...
Cardinal utility has been implicitly assumed in decision theory ever since Daniel Bernoulli's analysis of the St. Petersburg paradox. Rigorous mathematical theories of cardinal utility (with application to risky decision making) were developed by Frank P. Ramsey, Bruno de Finetti, von Neumann and Morgenstern, and Leonard Savage. However, in ...
Economic ethics attempts to incorporate morality and cultural value qualities to account for the limitation of economics, which is that human decision making is not restricted to rationality. [31] This understanding of culture unites economics and ethics as a complete theory of human action. [ 23 ]
Act utilitarianism is a utilitarian theory of ethics that states that a person's act is morally right if and only if it produces the best possible results in that specific situation. Classical utilitarians, including Jeremy Bentham , John Stuart Mill , and Henry Sidgwick , define happiness as pleasure and the absence of pain.
It assumes that the target utility is the maximum utility across the population based on adding all the separate utilities of each individual together. The main problem for total utilitarianism is the " mere addition paradox ", which argues that a likely outcome of following total utilitarianism is a future where there is a large number of ...
For example, rule utilitarianism was criticized for implying that in some cases an individual should pursue a course of action that would obviously not maximise utility. Conversely, act utilitarianism was criticized for not allowing for a 'human element' in its calculations, i.e. it is sometimes too difficult (or impossible) for an ordinary person.