Interpersonal comparisons of utility

The concept of interpersonal comparisons of utility refers to the evaluation of satisfaction or well-being across multiple individuals, aiming to determine the relative levels of "utility" (happiness or benefit) experienced by each person. This concept is widely regarded as problematic in economics, as subjective well-being lacks an objective metric, making direct measurement and comparison between individuals inherently challenging.^[1]

The primary challenge lies in the inability to directly observe or access another individual's internal thoughts and emotions, rendering it impossible to objectively determine whether one person experiences greater utility than another in a given context.^[2][3]

Comparing utility between individuals typically depends on subjective judgments and ethical assumptions regarding the nature of "well-being" or "happiness," making such analyses inherently normative rather than purely empirical.^[3]

Despite the inherent difficulties, certain economic theories, particularly within welfare economics, incorporate interpersonal comparisons of utility to assess the effects of policies on different population groups. However, such analyses are typically conducted with substantial caveats and methodological limitations.^[4]

Interpersonal utility comparisons are widely debated, with many economists and philosophers asserting that the inability to fully understand others' mental states renders such comparisons unreliable. A key distinction exists between comparisons of absolute utility levels and differences in utility between individuals. Utilitarianism relies on the comparability of utility differences to optimize a social welfare function, whereas Rawls’s maximin principle depends on the comparability of absolute utility levels. The extent to which interpersonal utility comparisons are considered valid is influenced by whether one adopts an ordinalist or cardinalist interpretation of utility functions.^[1]

Utility differences refer to the measurable variations in utility levels between individuals, particularly in relation to their ability to perceive changes in well-being. Psychological studies suggest that humans have finite sensitivity, meaning small differences in utility may go unnoticed. This concept, explored by economists such as Francis Edgeworth and Jeremy Bentham, underpins the idea that a "just perceivable" change in utility can serve as a unit of comparison across individuals. The Weak Majority Preference Criterion (WMP) supports interpersonal utility comparisons by prioritizing utility differences that influence the preferences of at least half of a population. This principle leads to a utilitarian social welfare function, where social welfare is determined by the unweighted sum of individual utilities.^[4]

Utility is a subjective measure of satisfaction that differs among individuals based on personal values, experiences, and circumstances. Cultural background, psychological factors, and socio-economic conditions influence how utility is perceived. This variability complicates economic analyses, as utility cannot be objectively measured or directly compared across different individuals.^[2]

It is argued that, by being inherently subjective, it is impossible to objectively quantify utility and compare individual levels of well-being. Differences in personal preferences, perceptions, and circumstances prevent the establishment of a universal measurement standard. As a result, economic theories relying on interpersonal utility comparisons face significant methodological and philosophical challenges.^[2]

Some argue that making interpersonal utility comparisons can raise ethical issues if it implies that some individuals' happiness is inherently more valuable than others.^[5]