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Économie théorique et statistique économique

Nature volume 145, page 8 (06 January 1940) | Download Citation

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Abstract

IN the classical economics of Marshall, it was assumed that a consumer spends his income so as to obtain the maximum possible 'utility', and it was deduced that the prices of commodities must be proportional to their marginal utilities. The weak point of this is that no one knows exactly what this utility is, and still less how it can be measured. Modern mathematical economists, in particular E. Slutsky, J. R. Hicks, R. G. D. Allen, have, by developing Edgeworth's 'indifference curve' and Pareto's 'scale of preference', succeeded in constructing a theory of value on a new and much sounder basis. All that is assumed is that the consumer knows, of the various sets of goods purchasable for a given sum, which he likes best, which second best, and so on. It is amazing how this apparently inadequate postulate is adapted to mathematical treatment, including the use of the differential calculus to determine the maximum satisfaction obtainable with a limited amount to spend.

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DOI

https://doi.org/10.1038/145008a0

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  1. Search for H. T. H. PIAGGIO in:

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