Experienced utility Notes for November 21

Main points

Kahneman and Krueger seek to revive the nineteenth-century version of utility: actual felt happiness rather than revealed preferences. Specifically, they claim that it is possible to measure what they call “experienced utility” without using inaccurate reports of “remembered utility.”

They also claim to be able to construct a cardinal index of interpersonal utility, the U-index. What that means is that their index has three features:

  1. It measures experienced utility, feelings of happiness and unhappiness.
  2. It compares the happiness and unhappiness of different people. That’s what makes it an index of interpersonal utility. An index of intrapersonal utility, by contrast, would compare the states of a single person.
  3. Its numbers tell you how much happier one person is compared with another. That’s what it means to call it a cardinal index. An ordinal index, by contrast, would just tell you the order in which they are ranked and not what separates one place in the index from the next.

One interesting feature is that the U-index involves an ordinal index of intrapersonal utility but a cardinal index of interpersonal utility. People are asked whether they are in an unhappy state at any given point during the day. That gives an ordinal measure: “are you unhappier than normal?” rather than “how much unhappier than normal are you?” They get a cardinal measurement of interpersonal utility because they compare the amount of time different people spend in an unhappy state: 2 hours is twice as long as 1 hour, e.g..

Our discussion

Prof. Brown kicked us off by showing how this research program could be used to solve a problem in economic policy making.

Amadé expressed some doubts about the wisdom of some of the choices they made. He described a different way of establishing a meaningful scale of happiness and unhappiness that, he said, would preserve more information than the U-index does.

Annie and I said it wasn’t obvious to us that the sum of momentary happiness is a better measure of well-being than remembered utility with its peak-end rule. After all, runners experience a lot of momentary discomfort for the sake of winning the race. If they win, or run well, they will view that as success even if the sum total of their uncomfortable moments is much higher than the sum of happy moments at the end. And as John Stuart Mill said, we often think it’s more important to struggle at something worthwhile than to enjoy lots of simpleminded pleasures.** This is part of his case in Utilitarianism for thinking that some pleasures are of higher quality than others.

Finally, Akshata and Dylan led us through a discussion of Indian and Buddhist views about our relationship to suffering, both in ourselves and others. Your loyal correspondent declares himself completely incapable of commenting sensibly on this topic and so he will gracefully bow out.

This page was written by Michael Green for Freedom, Markets, & Well-being, PPE 160, Fall 2012. It was posted November 21, 2012.
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