A case for cardinal utility and non-arbitrary choice of commodity units

Yew Kwang Ng, Jianguo Wang

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6 Citations (Scopus)

Abstract

With preference changes, cardinal utility is indispensable. For any necessity good, there exists an intermediate consumption level at which a change in preference intensity has no effect on utility, below/above which an increase in preference intensity decreases/increases utility. This is supported by an indicative empirical survey. At the intermediate consumption level, the utility from the relevant good is zero. For a Cobb-Douglas utility function, this intermediate consumption level equals one, making the choice of the unit of measurement non-arbitrary.

Original languageEnglish
Pages (from-to)255-266
Number of pages12
JournalSocial Choice and Welfare
Volume12
Issue number3
DOIs
Publication statusPublished - 1 Jun 1995

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