In 1906 Pareto expounded for the first time his theory of non-closed cycles and of the order of consumption, which he closely connected with the lack of integrability of the demand function. Pareto maintained that when total utility depends on the temporal path followed in consumption, while marginal utilities do not depend on it, it is possible to measure the utility itself: i.e., the consumer’s utility function which verifies the aforementioned property is unique except for a linear increasing transformation. Unfortunately, the proof of this theorem contained in the 1906 article is wrong: during the demonstration Pareto implicitly supposes that the order of consumption is immaterial. A correct, albeit incomplete, proof is contained in the mathematical appendix of the Manuel (1909). In this work we will reformulate the Paretian theory of the order of consumption and we will present an alternative proof of the aforementioned theorem.
Order of consumption and measurability of utility
SCAPPARONE, PAOLO
2009-01-01
Abstract
In 1906 Pareto expounded for the first time his theory of non-closed cycles and of the order of consumption, which he closely connected with the lack of integrability of the demand function. Pareto maintained that when total utility depends on the temporal path followed in consumption, while marginal utilities do not depend on it, it is possible to measure the utility itself: i.e., the consumer’s utility function which verifies the aforementioned property is unique except for a linear increasing transformation. Unfortunately, the proof of this theorem contained in the 1906 article is wrong: during the demonstration Pareto implicitly supposes that the order of consumption is immaterial. A correct, albeit incomplete, proof is contained in the mathematical appendix of the Manuel (1909). In this work we will reformulate the Paretian theory of the order of consumption and we will present an alternative proof of the aforementioned theorem.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.