Research Seminar in Decision and Action Theory: Franz Dietrich (Paris School of Economics & CNRS)

Title:

Welfare vs. Utility

Abstract:

Ever since the Harsanyi-Sen debate, it is controversial whether someone's welfare should be measured by her von-Neumann-Morgenstern (VNM) utility, for instance when analysing welfare intensity, social welfare, interpersonal welfare comparisons, or welfare inequality. We prove that natural working hypotheses lead to a different welfare measure. It addresses familiar concerns about VNM utility, by faithfully capturing non-ordinal welfare features such as welfare intensity, despite resting on purely ordinal evidence such as revealed preferences or self-reported welfare comparisons. Using this welfare measure instead of VNM utility alters social welfare analysis -- for instance, Harsanyi's “utilitarian theorem” now effectively supports prioritarianism. VNM utility is shown to be a hybrid object, determined by an interplay of two factors: welfare and attitude to intrinsic risk, i.e., to risk in welfare rather than outcomes. The paper is available here: http://www.franzdietrich.net/Papers/Dietrich-WelfareVsUtility.pdf 

As usual, the seminar will be held in person, but here is a Zoom link for remote participation:
https://lmu-munich.zoom.us/j/93279453658?pwd=MGRkZ1lOYTVtK2tleWVHbFZ4UFNzZz09