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Symposium on Ivan Moscati’s “Measuring Utility. From the Marginal Revolution to Behavioural Economics”

Ivan Moscati, Measuring Utility and the Philosophy of Economics

Conrad Heilmann
p. 109-117
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Ivan Moscati, Measuring Utility: From the Marginal Revolution to Behavioral Economics, Oxford: Oxford University Press, 2019, 352 pages, ISBN 978-019937277-5

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1Philosophy of economics is a wonderful occupation. Calling yourself a “philosopher of economics” gives you license to change philosophical perspectives with the same frequency with which others change their music playlist, in other words: whenever the fancy takes you. One minute you could be worrying about the nature of welfare and well-being, the next minute you could be examining accounts of evidence underpinning behavioural interventions or the foundations of choice models, only to finish the day by thinking about the axiomatic properties of a utility function. Philosophy of economics has many faces: it allows you to think deeply about rationality, ethics, epistemology, measurement, and formal models—sometimes even at the same time. And that, it has to be said, is not even half the joy and wonder. What can also happen is this: you receive a book in the mail. A book that not only combines the many faces of philosophy of economics, but even does you one better than that: it tells you a beautifully written and detailed story, a well-researched historical account on a key topic in the philosophy of economics. That is what happened to me, and the book I am talking about has been written by Ivan Moscati, and the topic is a historical account of utility measurement, of course.

2Reading “Measuring Utility” by Ivan Moscati (2019) reminds us of the importance of history for the philosophy of economics: some of the founders of the field that we call “philosophy of economics” these days were actually historians of economic thought in their day job. And given the ever-changing interactions between philosophy and economics, it has always been important to reach back to authors from times in which philosophy and economics were not understood as forming separate academic disciplines. Ivan Moscati’s book does both: it reminds us of research in the past centuries in which researchers from several disciplines interacted with each other to investigate—conceptually, theoretically, empirically, and mathematically—how one could possibly be successful in “measuring utility”. Doing so, he also presents a reconstruction of the underlying views on measurement held by economists.

3The book is organized in four parts. Each part covers a significant step in the history of utility measurement in economics, starting with the marginal revolution in Part I, ordinal and cardinal utility measurement in Part II, expected utility theory in Part III, to finish with experimental utility measurement and behavioural economics in Part IV. The book is organized around four goals: it wants to (1) reconstruct the history of utility measurement and history of utility theory, (2) describe the interplay between utility analysis and the understanding of measurement, (3) explore the interdisciplinary aspects between economics, psychology and measurement, and (4) discuss some themes of the epistemological dimension of measurement.

4What about philosophy’s role in the history of measuring utility, though, one may ask? For all the interdisciplinary exchanges Moscati describes, and all the importance that one may want to ascribe to philosophers in such exchanges, the role of philosophy in Moscati’s historical account of the measurement of utility is quite small. Perhaps rightly so: many philosophical discourses that are related to measuring utility have been proceeding in isolation from the debates in economics. But still, if one thinks about the rich philosophical debates of probability interpretations, measurement, value concepts, rationality, the nature of preference, and well-being, it seems sobering that so little seems to have had lasting influence and relevance for economic theory over the past decades. To be sure, this is not a criticism of Moscati’s book—on the contrary, he actually regularly returns to reflections about measuring utility from an epistemological standpoint. It is actually one of the four main goals of his book to reflect about the epistemology of utility measurement. Rather, the sobering fact lies in how small an influence philosophers have had with regards to debates about measuring utility in economics, at least according to the historical account of Moscati.

5Something else that is noteworthy for its relatively minor role in the book is the evaluation of the success of the research in question. Some might see the utility concept and the way it is used in economics as the root of everything that is unsatisfactory about economics as a discipline: on such a view, utility theory is to blame for crudely reducing complex social behaviour to actions of egoistic self-maximizers. There may be ways to find reasons to support such a sceptical view in some aspects of the reconstructions. More optimistic commentators might point to the daunting nature of the task—a quantified characterisation of a value concept that relates to human behaviour—and celebrate the fact that the research described by Moscati has laid the foundations for rigorous empirical work of the kind that is currently undertaken by experimental and behavioural economists. On this question, I would think there is more that Moscati would have to say (and could easily say). In the book, he limits himself very carefully to a few observations about the measurement concepts that are implicit in the research he reconstructs, but we do not find a broader assessment of what has been achieved and what has not. It would seem tempting to do otherwise. To what extent is the story of ‘measuring utility’ a successful one in his view?

6These two themes—“What role for philosophy?” and “What to make of the scientific achievements of utility theory?” I want to explore a bit further in this essay. I won’t do so at this level of generality, of course. (Maybe Ivan Moscati himself is tempted to do so in a reply to this review!) Rather, I will simply mention a few debates from philosophy and see to what extent they form a conceptual or methodological challenge to utility theory in economics.

1. Interpretations of Probability

7Whenever I teach utility theory, I teach measurement alongside with it. So, Moscati already had me with the title of his book. Another subject that is—from a philosophical perspective—very closely related to the measurement of utility is that of the “interpretation of probability”. That is, debating whether probabilities should be seen as subjective degrees of beliefs, or as representing something more objective, such as frequencies, logical relations, or propensities. The philosophical debate about the interpretation of probability is partly metaphysical and partly epistemological, but it has also fostered fundamental concepts for utility theory.

8It is interesting how little attention is given in the book to these questions about probability, and in particular the subjective interpretation of probability advanced by de Finetti and Ramsey. Both researchers are only mentioned in passing—De Finetti as part of the description of the Paris 1952 conference organized by Maurice Allais; and Ramsey in the context of introducing Savage. At least from a current perspective, this seems about right. Apart from economic theorists deeply interested in foundations, Ramsey and de Finetti are not quite household names in economics (Ramsey’s name is known to those dealing with finance, but not for his subjective probability interpretation). Philosophers, on the other hand, are often not quite aware of Savage’s decision theory, as they are rather more informed about the philosophical decision theories that build on Richard Jeffrey’s alternative framework. But I am still wondering to what extent there would not be more historical connections to be made between what philosophers had to say (even if that was more in isolation from economics than a philosopher of economics would hope so!). For instance, in the context of utility measurement it is interesting that Ramsey speculated about the future availability of a “psychogalvanometer”:

it is, I suppose, conceivable that degrees of belief could be measured by a psychogalvanometer or some such instrument (Ramsey, 1926, 161)

9It is perhaps telling that Edgeworth’s “hedonimeter” has entered the vernacular of those writing about measurement of utility, well-being, and happiness, whereas Ramsey’s is hardly ever mentioned. Maybe all that is what is bound to happen to foundations: once they are there, they are used, but not always equally prominently reflected upon. A similar phenomenon can be observed with Savage’s decision theory in economics: practical and experimental work nowadays proceeds mostly by using objective probabilities, and the careful “official” foundations of subjective expected utility theory are the purview of the economic theorists. So far, I have discussed philosophy of probability and its absence in “Measuring Utility” as a question about how the history of utility measurement unfolded between the disciplines and the minor role of philosophy therein. And it would be very interesting to have Ivan Moscati’s view on it.

10Is there—beyond the historical question—also a substantive challenge here towards economic theory or economics to pay more attention to the interpretation of probability in current or future debates? Yes. It seems that there are some live debates that could profit from a more nuanced understanding of the conceptual challenges involved in dealing with probabilities. One example is the longstanding debate between the “Simple Heuristics” research programme advanced by researchers such as Gerd Gigerenzer and the “Heuristics and Biases” research programme in behavioural economics. One key difference between both programmes is the differing take on the normative role of the expected utility theory axioms. However, a further key difference lies in how the programmes conceptualise probability in the first place. Behavioural economists typically buy into the subjective, Bayesian, interpretation of probability (and presume tacitly that any frequencies that are given to subjects in experiments are simply reflected in their respective degrees of belief). The “Simple Heuristics” research programme, however, emphasizes the gap between the frequencies given and the degrees of belief of individuals much more strongly. The reason for this is that they are typically not committed to a strict subjective interpretation of probability, as they are in general not wedded to presuming the normative force of subjective expected utility theory as a standard of rationality. Now, the discussions between the two camps of “Heuristics and Biases” and “Simple Heuristics” are infamously heated (Samuels et al, 2012). Arguably, a better appreciation of their differing preconceptions about probability could have been helpful in overcoming what are often overly pronounced differences of view between the two programmes. Another example is the renewed attention to problems of “ambiguity” as displayed in the Ellsberg paradox and whether precise probabilities are always opportune to assume. These discussions could profit from, for instance, awareness of the debate between Keynes (who argued for a logical interpretation of probability, and due to that interpretation, the importance of imprecise probabilities) and Ramsey. It thus seems that there are some grounds for supposing that missing interdisciplinary connections between philosophy and economics with regards to the interpretation of probability do matter. And here I am wondering whether these speculations do ring true from Ivan Moscati’s historical point of view.

2. Conceptual clarification

11Moscati’s reconstruction of the development of utility theory shows that, as decades went by, economists devoted more attention to the formal and empirical aspects of measuring utility than to clarifying what precisely it is that they want to measure. Whereas the early debates in the marginal revolution and the beginnings of expected utility theory often referred to conceptual questions about the nature of utility, this waned with the introduction of the axiomatic frameworks of the representational theory of measurement. Once equipped with axioms to test, the focus shifted to investigating them mathematically and empirically. And while the latter development—that of more empirically-driven investigations in behavioural and experimental economics—must surely count as a good development, it was, arguably, not accompanied with paying attention to the conceptual content of what was being measured and tested. My question to Ivan Moscati is whether he in fact would agree that there is a “conceptual blind spot” in the history of utility measurement in economics. To put it very forcefully: by conceptual blind spot I mean that straightforward questions like the following have not yet been answered satisfactorily, or at least not explicitly agreed upon in economics: to what extent are preferences and utility mental or behavioural concepts, and what precisely is the mental state of a preference referring to? (Moscati briefly alludes to this question at many stages in the book, such as in Chapter 16.6.3, but does not discuss it extensively.) To what extent is utility indicative of well-being or welfare, and what additional assumptions are needed to establish these links? Now, philosophers have engaged in many debates about the nature of preference (and psychologists and cognitive scientists, too, have investigated the precise nature of mental states). They have also engaged in philosophical discussions about the measurement of well-being (e.g. Alexandrova, 2017). It seems to me that both of these debates would also benefit from being conducted in a more interdisciplinary manner. And if so, then (the lack of) conceptual clarification is an important dimension of the epistemological analysis of utility measurement.

12Let me discuss a more specific example of conceptual clarity taking a back seat to make the point more precise. Take the issue of time discounting and the introduction of Samuelson’s (1937) model, also discussed by Moscati (2019, 110ff). This model has led to adopt as the industry standard the framework of exponentially discounting future utility. Now, a smooth discounting function is mathematically convenient, and it allows discounting the future without introducing a time horizon. Exponential time discounting is also attractive as it preserves the utility function dynamically—there are no preference reversals to consider. All this has led to exponential discounting of utility being granted a “quasi-normative” status in economics: the derivation of exponential discounting via time preferences is closely related to the standard utility representations, and the dynamic preservation of the utility function it affords makes it a “natural” extension to the standard model. Exponential discounting is, for all the talk of different types of “hyperbolic” time discounting models, still the preferred model of discounting, and at the very least the universally accepted baseline of “rational” time discounting in economics. Now consider the little known paper by Samuelson (1939), in which he says the following:

I have indicated elsewhere [Samuelson 1937] what can be done in a mathematical way with such hypotheses [about individual time preference]. This was intended only as an axiomatic experiment, an intellectual curiosity, which served to reveal to my own satisfaction the arbitrariness of the assumptions and the barrenness of the results. (Samuelson, 1939, 291f.)

13Here, Samuelson is much more forceful than Vickrey (as cited by Moscati, 2019, 134) in raising doubts about his model. What we do not know—and this also holds for recent models of time discounting that build on Samuelson’s model—is whether, for instance, future utility is discounted because of epistemic limitations (such as deep uncertainty about the future) or because of a less strong link to the present value future utility provides for the individual in the present? And, if the latter, is it a psychological fact about individuals, or a (defensible?) ethical judgement on part of the individual? Questions like these are simply unanswered. The example of Samuelson’s model is perhaps the strongest one in terms of economic theory favouring improving the mathematical and empirical aspects of their theory over sorting out the conceptual questions. Indeed, in the recent literature on time discounting in economics, there is very little conceptual discussion compared to the attention that is given to mathematical and empirical aspects. A notable exception remains the review by Frederick et al (2002)—however, nearly all the references to conceptually ambitious work on time discounting that are discussed in there are decades old, not to mention the fact that the review itself is not of recent date anymore. So, this is a more specific example of a “conceptual blind spot”, other examples of which I referred to above. If all that holds, then this forms a difficult epistemological challenge for the measurement of utility in economics.

3. Representational Theory of Measurement

14A key theme of Moscati’s book is the development of the representational theory of measurement (RTM). And indeed, here we do find concrete and extensive involvement of philosophers, notably with Davidson and Suppes, and institutionally in the Stanford value project, discussed in Chapter 15 of the book. The very existence of this episode in the history of utility measurement in economics can thus count as good news for the philosopher who is looking for evidence of philosophy having interdisciplinary relevance for economics on this question. From a philosophical point of view, the Stanford project and its development of RTM has served as both a starting point and a foil for philosophy of measurement. There are two challenges that contemporary debates in philosophy could present for the role of RTM in economics.

15Firstly, it seems that there is an important set of criticism from methodologists and philosophers of science against RTM that is not quite prominent in economics. Philosophers of economics have pointed out various deficiencies of RTM as a theory of measurement: that little is said about the actual act of measuring something, i.e. how to construct and calibrate reliable measurement devices, what to do about measurement errors, to name two prominent criticisms (Tal, 2015). RTM, so the criticism goes, presents an unhelpfully abstract and idealised conception of measurement that needs to be complemented (or replaced) by other accounts of measurement. Here, it would be interesting to have Ivan Moscati’s view on whether these epistemological challenges also apply to utility measurement. My own take on it is—following the discussions about interpretation of probability and conceptual clarification with regards to preference, utility, and discounting—that these challenges about actually measuring are important, and that they are one way to more generally raise the epistemological worry of conceptual clarity or the lack of it.

16Secondly, there is a new wave of interpretations of RTM in philosophy that could indeed be used to point to some of the conceptual blind spots in economics that I have raised above. In recent articles by Baccelli (2018), Vessonen (2017), and Heilmann (2015), RTM is interpreted differently than in the earlier philosophy of science measurement literature. These articles emphasize different aspect of the contribution of RTM to measurement, that is, the resources RTM offers for conceptual clarification. The axioms of RTM are characterised as tools that allow researchers to answer important questions about the concepts they want to measure. The philosophical discussions of RTM offer two kinds of challenges to the literature in economics: one, about the problems of actual measurement, and two, about the importance of conceptual clarification. Here, the historical question is whether this type of interpretation of RTM was indeed already present in the early developments of it, as suggested by, for instance, Narens (1985; 2002). It remains to be seen, however, whether conceptual clarification via RTM (or otherwise) is something that will indeed be fruitfully pursued in recent and future behavioural economics!

4. Conclusions

17I have explored a bit how philosophical debates might challenge, complement, or augment different aspects of utility theory in economics—prompted by the comparatively minor role philosophy has played in the development of utility theory in economics. I should stress once more that focusing on this is not a criticism of Moscati’s reconstruction, rather: it was prompted by it. It seems for all the increasing interdisciplinarity between philosophy and economics, there are still many aspects on which there are separate questions, separate debates. and separate frameworks. I should also stress that in mentioning the debates by philosophers of economics I am by no means engaging in blaming economists for not listening to philosophers, or philosophers failing to engage with economists. It simply is what it is: different disciplines have evolved, and they focus on different aspects of a problem. What we can learn from Moscati’s book is that there have been some parts of the history of utility theory (notably the Stanford value project), which has seen deep engagement between philosophers and economists. But there are many other aspects where we are still yet to see it. I am wondering what Ivan Moscati’s view would be on this, considering his historical account.

18I close with one gem for the philosopher that can be found in the book, where we learn that the famous philosopher Donald Davidson was once—in the beginnings of the Stanford value project, to be precise—taken “under the wings” of his non-philosopher colleagues because, in his own words “they thought this guy really ought to get some stuff out” (Moscati, 2019, 229)! As I think was apparent from the beginning, here’s one philosopher of economics who is much better off having read this book. You can be, too: all you need to do is to tell your librarian to order a copy. Or order it for yourself. Or both.

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Conrad Heilmann, « Ivan Moscati, Measuring Utility and the Philosophy of Economics »Œconomia, 9-1 | 2019, 109-117.

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Conrad Heilmann, « Ivan Moscati, Measuring Utility and the Philosophy of Economics »Œconomia [En ligne], 9-1 | 2019, mis en ligne le 15 mars 2019, consulté le 21 septembre 2021. URL : ; DOI :

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Conrad Heilmann

Erasmus Institute for Philosophy and Economics (EIPE), Erasmus School of Philosophy, Erasmus University Rotterdam,

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