Talk:Marginal utility

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References[edit]


marginal utility[edit]

The marginal utility of a consumer is directly related to its demand curve.Discuss —Preceding unsigned comment added by 41.155.22.128 (talk) 18:59, 24 August 2010 (UTC)

Confusing sentences[edit]

I find this sentence confusing:

Constraints are conceptualized as a border or margin.

As an informed reader, it seems to me that this sentence is trying to explain the meaning of the word 'marginal'. If I were uninformed about the topic, I would be asking myself 'conceptualized by whom?', or 'what for?' or 'what does conceptualized mean in this context?'

Also, the following sentence is misleading:

The location of the margin for any individual corresponds to his or her endowment, broadly conceived to include opportunities.

That's misleading because economists sometimes speak of the 'marginal utility' associated with consumption levels not corresponding to the endowment. For example, using standard neoclassical terminology, we might speak of a consumer with a smoothly differentiable utility function U(C), decreasing marginal utility, endowment equal to 10, and a bliss point at 5. Such a consumer would choose C=5 because marginal utility equals zero at that point. But in this example, we are discussing marginal utility at a point that does not correspond to the endowment.

These sentences should therefore be rewritten for greater accuracy and clarity. Rinconsoleao (talk) 10:44, 8 September 2010 (UTC)


"The concept of marginal utility played a crucial role in the marginal revolution of the late 19th century, and led to the replacement of the labor theory of value by neoclassical value theory in which the relative prices of goods and services are simultaneously determined by marginal rates of substitution in consumption and marginal rates of transformation in production, which are equal in economic equilibrium."

Where did the replacement take place? In the minds of economists?

I didn't write that bit, but yes, it refers to the replacement of the labor theory of value as the main theory of value accepted by mainstream economists.Rinconsoleao (talk) 19:11, 3 November 2010 (UTC)

Given that the article goes on to further point out that Marx wrote Das Kapital after the marginal revolution is thought to have begun, it seems odd to have the article begin with a sentence that gives a different impression. 198.204.141.208 (talk) 18:00, 3 November 2010 (UTC)

The labor theory of value far precedes Marx. It's the theory of value used by Ricardo (and Adam Smith, too, as far as I know). So the dates mentioned are perfectly compatible.Rinconsoleao (talk) 19:07, 3 November 2010 (UTC)

Misleading link to Measure (mathematics)[edit]

This page speaks of some theories of utility being 'quantified', meaning that these theories associate different levels of utility with different real numbers. That is not the same thing as saying that utility is a measure, in the sense of the mathematical field called 'measure theory'. In that theory, a measure is a very specific type of function that maps sets into real numbers and has several special properties. Saying that utilities are described by numbers, and can even be added, subtracted, and so forth is not the same as saying that the utility function is a measure. (When we calculate expected utility by adding or integrating utility with respect to a probability, this probability is a measure, but the utility function itself is not a measure.)

Therefore, as I argued some time ago, the link to Measure (mathematics) is misleading. That link should be eliminated, and therefore the term 'quantified' should be defined with different wording.

The following are the relevant (as far as I can tell) comments from this archived discussion. Rinconsoleao (talk) 15:28, 8 September 2010 (UTC)

I would appreciate it if you could clarify further. If U(x) is a neoclassical utility function (or a list of the numbers associated with a complete neoclassical ranking by order of preference), what is it a measure over? Are you asserting that it is a measure over the space of goods x? Or are you asserting that it is a measure over the space of 'utilities' u? Or are you asserting something else? --Rinconsoleao 09:54, 9 August 2007 (UTC)
Neoclassical economics defines a utility function as a mapping, with certain properties, over real numbers. It would be empty, in neoclassical economics, to call this a mapping over utilities, as utilities would be no more or less than that over which a utility function maps. —SlamDiego←T 10:10, 9 August 2007 (UTC)
Fine. Now in what sense is that mapping a measure? --Rinconsoleao 10:42, 9 August 2007 (UTC)
Arithmetic performed upon it yields meaning full results. For example, as I stated elsewhere, the signs of differences are meaningful. That is why transformations must be at least monotonic (if not more rigidly restricted) to be accceptable, and why monotonic transformations are possible. I have already made these points. —SlamDiego←T 10:47, 9 August 2007 (UTC)
OK, but if that's what you mean by measure, then it is not what is meant by measure in measure theory. Therefore, I would again suggest that we eliminate the link to measure theory, which will only confuse readers. A measure, in measure theory (as I assume you do know) is a function that maps sets to the real line, subject to certain regularity conditions. The main regularity condition is that the measure of the union of A and B is at least as large as the measure of A. One can perform meaningful arithmetic on functions which are not measures. --Rinconsoleao 11:07, 9 August 2007 (UTC)

'Utility' section[edit]

The section on 'utility' is well-written and makes some important philosophical distinctions, but I think it still needs improvement.

(1) The section mentions 'quantified' conceptions of utility, but fails to point out that there are two very different forms of quantification: 'cardinal' models of utility where the numerical value of utility is assumed to have some actual meaning in terms of intensity, and 'ordinal' models where the numerical value only indicates the position of a particular choice in a ranking of possible choices. Should mention both. Would also be helpful to mention that models of expected utility are implicitly assuming cardinality.

(2) The Austrian conception is mentioned as a non-quantified version of utility, saying that utility is conceived in terms of 'satisfaction of needs'. That's a good description, but may be unclear to someone who is not already familiar with the Austrian concept. It would be helpful to say a bit more to clarify this, mentioning rankings of possible uses of the goods consumed.

Alternatively, and probably better, we could add a section on 'Non-quantified marginal utility' to complement the section on 'Quantified marginal utility'. Rinconsoleao (talk) 14:21, 10 September 2010 (UTC)
Rinconsoleao is right. The term quantified is ambiguous. See this statement, for example: "quantifiable ... as if different levels of utility could be compared along a numerical scale". What does compared means? A meaningful comparison of the differences between two utility measures implies cardinal utility. Meaningful comparisons across numbers as in ratio scales is not even cardinal utility, is measurable utility (a concept a bit more primitive, see cardinal utility). And finally, there is ordinal utility theory, in which comparisons are not meaningful unless they use the ratios of the first derivatives of the posited utility index. --Forich (talk) 19:47, 10 September 2010 (UTC)
Thanks, this also seems helpful for addressing my comments in the previous section, on measure theory. I was unaware of the term measurable utility that is discussed on the cardinal utility page. Now I understand how the term 'measure' crept into the marginal utility page. But as far as I can tell, this is still unrelated to measure theory in the mathematical sense of the word. So do you agree that the linking to measure theory is inappropriate? Rinconsoleao (talk) 10:28, 13 September 2010 (UTC)
the measurability issue is relevant to the cardinal utility entry, but not so much for the marginal-utility one. I agree that the link is unnecessary. --Forich (talk) 14:01, 13 September 2010 (UTC)

(3) The penultimate paragraph makes the claim that an ordinal conception of utility 'doesn't depart from the concept of usefulness'. That's not an unreasonable claim, but it seems to be original research. The purpose of the statement seems to be to argue that all conceptions of marginal utility (not just the Austrian one) can be analyzed in the same terms, as long as we start from the notion of 'usefulness'. That philosophical claim might be true, but I have never heard it defended anywhere other than this Wikipedia page. Therefore I think it should be deleted, given Wikipedia's ban on original research. Otherwise a citation is needed, specifically defending that claim. Rinconsoleao (talk) 08:00, 10 September 2010 (UTC)

Criticisms?[edit]

I myself am not in any way qualified to provide any criticisms of Marginal Theory but there must be some out there with at least some credibility in academic circles. I think it would round out the article if such criticisms could be including. Thank you. WjtWeston (talk) 21:02, 3 December 2010 (UTC)

First sentence imo wrong[edit]

I didn't want to change it right away, but in an academic discussion I got confronted with the opinion that marginal utility was defined as a marginal change in utility, with reference to this Wikipedia article, which starts as:

"In economics, the marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service."

This sentence is at best misleading (I would say it's bluntly wrong). What is described here is a change (not even necessarily a marginal one) of utility. The correct definition of marginal utility is later given in the section "Quantified_marginal_utility". Translating what is expressed here in equations this into words, the first sentence should read:

"In economics, the marginal utility of a good or service is the gain (or loss) OF UTILITY RESULTING from a SMALL increase (or decrease) in the consumption of that good or service, DIVIDED BY THE MAGNITUDE OF THE RESPECTIVE INCREASE OR DECREASE." — Preceding unsigned comment added by 141.65.150.125 (talk) 19:19, 1 June 2012 (UTC)


Neutral Point of View?[edit]

The article dismisses marginal theory as a law with no citations but original research and thereby continues to refer to it as a law with a condescending tone, as if written by someone with propaganda. I'll try to make a few minor edits and add an original research tag to the section attempting to refute the argument. leaflord 20:07, 16 July 2012 (UTC) — Preceding unsigned comment added by Leaflord (talkcontribs)

Holy crap you've munged up the article pretty bad, removing links to other wiki pages and taking things out of order. 76.21.107.221 (talk) —Preceding undated comment added 21:42, 12 November 2012 (UTC)

The Marginal Revolution[edit]

This article and Marginalism share a largely-identical section on The Marginal Revolution. Maintaining the same text in two different articles is inefficient, so I encourage editors of Marginalism and this article to come up with the best way of removing the redundancy. Perhaps The Marginal Revolution should have its own article? Or maybe its home should be one of these two articles, with a short summary and a link in the other? Also, the same argument applies to other content that is largely the same in these two articles.

Silver hr (talk) 17:48, 27 February 2013 (UTC)

Marginal Utility Of Money[edit]

Marginal Utility of Money refers to 'worth of a rupee' to a consumer it means the utility consumed by a consumer in spending his one rupee. Example- if a consumer can buy 50 grams of rice , 30 grams of coffee and 100 gram of salt in one rupee and his total utility is 30 units then 30 is to be taken as its marginal utility of money . And the marginal utility of money remains constant. - Vaibhav Thapliyal (vthapliyal260@gmail.com , kingvaibhav007@fb.com) — Preceding unsigned comment added by 125.63.99.148 (talk) 07:25, 12 June 2013 (UTC)