The Transformation of Utility Theory and its Implications for Explaining Consumption

by Ulrich Witt *)Max-Planck-Institute of Economics

Jena, GermanyUlrich.Witt@econ.mpg.de

Draft – please do not cite without the author’s permission

abstract

Since its inception, utility theory has been transformed from a naturalistic, hedonic approach tohuman behavior laid out by Bentham into an abstract, subjectivist theory whose empiricalimplications are usually expressed exclusively in terms of co-variations of consumptionexpenditures, prices, and income. The present paper discusses some major steps in, and theconsequences of, that transformation. The significant loss of potential that utility theory can claimwith respect to explaining consumer behavior has more recently led to attempts to restore some ofthe original utilitarian notions. A complete reconstruction of the naturalistic utilitarian approach inthe light of modern behavioral sciences is, however, still lacking. The basics of such an approachwill therefore be outlined and some of the implications for explaining consumption behavior and itshistorical evolution will be highlighted.

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*) I should like to thank Wilfred Dolfsma, July Irving-Lessmann, Wilhelm Ruprecht, IanSteedman, William Wadman, and the participants of the HOPE conference “Agreement on Demand:The History of 20 Century Demand Theory” Durham, North Carolina 2005, for helpful commentsth

on earlier drafts. The usual disclaimer applies.

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I. Introduction

What microeconomics has to say on consumption today is the result of a continuous revision of theutilitarian program. In the original, Benthamite version, the utilitarian program was based on anaturalistic, hedonic theory of behavior. Utility was conceived of as a sensory experience in termsof pleasures (and the avoidance of pains). As such it was considered an ‘objective’, measurablenotion (Bentham 1948). Starting with Jevons’ (1879) reinterpretation the concept of utility graduallylost these ‘objective’ sensory connotations. In the further development, cardinal notions of subjectiveutility were substituted for ever more abstract, ordinal index number interpretations. Attentionshifted to the analytical problem of properly representing the theory by a utility function andindifference curves. The hedonic underpinnings of utility theory were abandoned.

By the mid 20 century, the development had arrived at a point where, in the positivist spiritth

of the time, Samuelson (1947, 91) castigated “the hollowness of utility” and suggested to eliminatethe concept altogether. Instead of its non-observable quantities, economic theorizing should expressits hypotheses in observable variables only. In Samuelson’s (1948) version, an axiomatic preferencetheory would be the proper substitute. Using information derived from a preference revelationprocedure, its implication would be a rigorously stated theory of demand (as in the earlier, butsimilarly inspired work by Hicks and Allen 1934) – or the “pure theory of consumer’s behavior”(Samuelson 1947, 90-1) – that dealt with quantities demanded, prices, and incomes alone.

While the rigor of this approach – now an established part of any more advancedmicroeconomic textbook – is unsurpassed it comes at a price. The “shift in emphasis away from thephysiological and psychological hedonistic, introspective aspects of utility” (Samuelson 1947, 90-1)has resulted in a situation in which the motivation that drives the consumers’ actions can no longerexplained. All that is offered are hypotheses about how a given amount of money is allocated amonggoods in relation to their prices and a given income. What it is that people wish to consume andtherefore demand, and why has to be left open. No explanation can be offered for why, at a givenpoint in time, people order their preferences in the way they are claimed to do. No reasons can begiven for why variations in income affect the demand for different goods and services quitedifferently. As a consequence, it is difficult to make sense of the role of demand for innovations andeconomic growth, the most significant economic features of the century.

In view of these problems, the present paper suggests to reappraise the explanatory potentialof a naturalistic, sensory approach to economic behavior for explaining consumption and itshistorical evolution. The underpinnings of such an approach can be derived from modern behavioralsciences. As will turn out, by developing these underpinnings, many features of the originalutilitarian program reappear as recently demonstrated by Kahneman, Wakker, and Sarin (1997; cf.also Kahneman, Diener and Schwarz 1999; Frey and Stutzer 2002). But also many features of theelder (non-utilitarian) theories of wants or needs reemerge. In fact, on such a basis, the potential ofseveral attempts that have been made over the decades to provide a richer account of consumerbehavior as, e.g. in the work of Lancaster (1966) or Becker (1965; cf. also Michael and Becker 1973)

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In addition, he argued that the motivation for an action is also affected by “its fecundity, or1

the chance it has of being followed by sensations of the same kind...” and “its purity, i.e. the chanceit has of not being followed by sensations of the opposite kind...” (ibid. p.30).

can better be appreciated.

Accordingly, the paper proceeds as follows. Section II sketches the basic tenets of sensoryutilitarianism as laid out by Bentham in his Principles of Morals and Legislation of 1789 and somerecent attempts to revive some of the sensory underpinnings. Sections III and IV recapitulate how,in the pursuit of the marginalist or subjectivist ‘revolution’ of the neoclassical period in economicsthe utilitarian program began to change and was eventually converted into a theory of preferencesand demand. Section V briefly discusses some prominent attempts that have been made to cure theloss of empirical content and realism that accompanied the transformation of utility theory. They areput in perspective in Section VI with non-utilitarian theories of needs or wants to prepare the groundfor extending the discussion in Section VII to recent developments in sociobiology and psychology.These developments have much in common with the naturalistic orientation that the program ofsensory utilitarianism originally had. A theory of needs and utility derived from their satisfaction isthen outlined in Section VIII on the basis of insights from modern behavioral and human sciences.It is extended in Section IX by reflections on the interactions between cognitive and non-cognitivelearning processes that are relevant for consumption behavior. The implications of the suggestedapproach for explaining the historical patterns by which consumption evolves are highlighted inSection X. Short conclusions are offered in Section XI.

II. Sensory Utilitarianism

The original utilitarian program formulated by Bentham (1948, first published 1789) is a blendingof a positive theory of action and a normative theory of justice. Though a major motivation for thewhole approach, the normative part will not be considered here. Borrowing the term from Hume,Bentham introduces “utility” as a synonym for “happiness” which, in turn, refers to the sensory,hedonic underpinnings by which Bentham wanted to make his concept ‘operational’. “Whathappiness consists of we have already seen: enjoyment of pleasures, security from pains” (ibid.,p.70). Consequently, Bentham focuses on the quantities of pleasures and pains generated bysomeone’s action or by a “sanction” imposed on someone by other agents or by nature.

Human action follows intentions, Bentham submits, and intentions orient towards theaction’s consequences in terms of pleasures and the avoidance of pains -- the ultimate motivatorsof human action (ibid., chaps. VII and X). With remarkable psychological intuition Bentham1

argues that the values which the quantities of pleasures and pain can take depend, in turn, on fourvariables: intensity, duration, certainty, and nearness (in time) of the pleasures and pains. He expandson a detailed enumeration of no less than fourteen different sorts of pleasures and twelve differentsorts of pains which are, in turn, subdivided further (ibid., chap. V). Moreover, he holds that eachof them can be sensed differently depending on yet another, long list of diverse circumstances which

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By calculating the quantities of pleasures and pains of all individuals affected and striking2

a balance he wanted to determine the moral justification of institutions like penal law or constitutionsor individual actions. An institution or action is morally right (wrong), if the balance is positive(negative). Where the balance has its greatest positive value, the morally best solution is found --Bentham’s “greatest happiness principle”.

he extensively commented on (ibid., chap. VI).

From today’s point of view, the different sorts of categories given by Bentham refer to quitea mixed bag of sensory perceptions, innate as well as learnt responses, and complex contingencies.However, the basic ideas are very modern ones (cf. Rozin 1999).

(i) Utility is interpreted as a hedonic experience generated by the pleasurable or painfulconsequences of an action like, e.g., the consumption of a commodity. Utility is thus an attribute ofactions not of objects.

(ii) As a hedonic experience utility can be derived, it is assumed, from several sources ofpleasures (and of pains that are avoided) simultaneously. Hence, utility is treated as a multi-dimensional variable.

(iii) As a sensory perception, utility is considered a measurable quantity that can be observed.

With respect to the last point and the concrete measurement of utility, Bentham takes a naiveview, assuming that pleasures and pains can intuitively be quantified, added up, and balanced(pleasures with positive values, pains with negative ones, ibid. chap. IV). Moreover, he claims thatan outside spectator observing someone who enjoys pleasures or suffers pains can attribute moneyequivalents to the strength of that person’s sensory experience. Since the attribution is considered‘objective’, a pecuniary measuring rod is thus established. On its basis, comparing between, andsumming up over, the utility of different agents is claimed to be possible. 2

As far as the positive part of Bentham’s sensory utilitarianism is concerned, his assumption(iii) – that utility, more precisely the quantities of pleasures and pains, can indeed be measured andobserved – is one thing. (The early utilitarians took this so much for granted that they did not eventhink of possible procedures of observation or measurement.) That outside spectators can attributemoney values to someone else’s hedonic experience and thus make them inter-personallycomparable is another thing. Since pleasures and pains are sensory perceptions, the former idea doesnot appear entirely inept. It has later been suggested that the Weber-Fechner law and the empiricalmeasuring of sensory perceptions on which the law is based could provide both the foundation andthe empirical method for utility measurement (see Stigler 1950, part II). In a recent paper written inthe light of modern psychological research, Kahneman, Wakker, and Sarin (1997) explain how thesensory perception of a hedonic experience arises from actions (assumption (i)), and how it can beobserved and measured (assumption (iii)).

They identify an immediate hedonic experience of outcomes (“instant utility”) whose valuescorrespond to Bentham’s variable “intensity”. Bentham’s variable “duration” turns out to need a

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The outcome of inter-personal utility comparisons rests on whether the money equivalents3

attributed to the individuals’ pleasures and pains are weighed equally for all individuals or whetherdifferent weights are used for different agents – a decision that involves a value judgement. If theseweights are assigned by an abstract equality criterion that does not account for the agents’ kinds ofmotives and pleasures/pains, Bentham’s hedonic calculus could, for instance, result in moraljustification for a sadist’s torturing of an innocent victim, provided the money equivalent of thesadist’s pleasures from malevolence exceed the money equivalent of the pains of the victim.

more differentiated representation. Kahneman, Wakker, and Sarin argue that, since the duration ofsensory perceptions is assessed in retrospect, only what is remembered can count for the subjectiverecord of a stream of immediate experiences usually varying in intensity (“remembered utility”).They provide evidence that what is remembered does not seem to reflect the whole stream ofimmediate experiences of pleasures or pains and their intensity. Remembered utility rather seemsto be represented by the average of the intensity at the peak of that stream and near the end of it –which means that remembered utility is not affected by the duration of the sensory experience.Kahneman, Wakker and Sarin also discuss how, on the basis of their immediate hedonic experience,people make predictions (“predicted utility”) and how remembered and predicted utility affectdecisions (“decision utility”). They argue that biases in both predicted and remembered utilitysystematically bias decision utility and thus decision making.

Yet, Kahneman, Wakker, and Sarin’s attempt to revive Bentham’s intuition concerning themeasurability and observability of utility as a sensory perception neither extends to his naive ideaof inter-personal comparison of utility on the basis of money equivalents nor his greatest happinessprinciple. Both are a matter of (hidden) normative judgement from which morally rather oddimplications can follow. By comparing their descriptive concepts of utility with what could be the3

corresponding normative ones Kahneman, Wakker and Sarin (1997) rather raise a normativequestion of a different kind that is less ambitious than the moral concerns of the early utilitarians (seealso Kahneman 1994). When the assessment of a stream of hedonic experiences is left to theintuitive working of our memory, the result is “remembered utility”. Since this does not fullyrepresent the temporal profile of instant utility, one could claim that people better base theirassessment on the “total utility”, determined by the integral of the value of instant utility over time.However, this would be a normative claim which people do not intuitively follow. Depending onhow this normative issue is decided, another (normative) question arises. Should people be forcedto make use of total utility where they tend to rely on remembered utility?

III. The Neoclassical Metamorphosis of Utility Theory

To understand why modern utilitarianism has so little in common with the just outlined, naturalisticsensory theory and why its normative branch is therefore confined to a purely formal, moraldiscourse, it is useful to briefly reconstruct what changes have been made after Bentham and why.The metamorphosis started with Jevons’ “Theory of Political Economy” of 1871 (Jevons 1897).Although Jevons took over Bentham’s pleasure-and-pain rhetoric, his intentions were different ones.

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For an extensive discussion of this point cf. Mirowski (1988, Chap. 1).4

This implication not only impedes an exchange on economic behavior with the behavioral5

sciences in which these notions play a role. It also hampers the discourse with the normative branch

He aimed at a mathematical formulation of utility theory, a “calculus of pleasure and pain”, inspiredby the calculus used in classical mechanics. In classical mechanics -- the then prevailing ideal ofscientific analysis -- regularities (‘laws’) are expressed in single functional relationships. They canbe subjected to differential calculus and the corresponding extreme value analysis. Jevons’ projectof constructing a corresponding “mechanics of utility and self-interest” (ibid., 23) aimed at a theorythat “...consists in applying the differential calculus to the familiar notions of wealth, utility, value,demand, supply, capital, interest labor, and all the other quantitative notions belonging to the dailyoperations of industry. As the complete theory of almost every other science involves the use of thatcalculus, so we cannot have a true theory of Economics without its aid.” (ibid., 4-5). 4

Since, as Warke (2000) has argued, Bentham’s assumptions with their complex, naturalisticcatalogue of pleasures, pains, sensibilities, and circumstances did not fit that project, Jevons saw aneed to simplify and introduced the following modifications of Bentham’s assumptions.

(i*) Unlike Bentham, he attributes “utility” not to actions, as the act of consuming a certain

iquantity x of a commodity i, i = 1,...,n, but to the quantities of the commodities (ibid., 40-42, 46-47).

i(ii*) While in Bentham’s interpretation, by the act of, say, consuming x , several distinctpleasures can be enjoyed (pains be avoided) simultaneously, Jevons merges all these distinct sensoryperceptions into one compound “feeling”, represented in his calculus by the one-dimensionalvariable “utility” (Jevons 1897, 8-15).

(iii*) Jevons classifies both the compound “feeling” and the variable “utility” that representsit, as subjective, more specifically, as inscrutable (ibid.,15-17).

Of these modifications, the subjectivist creed (iii*) is probably the most widely accepted onetoday. Jevons’ claim that “every mind is .. inscrutable to every other mind, and no commondenominator of feeling seems possible” (ibid., p.15) denies pleasures and pains their status assensory perceptions that can, at least partially, be made objective. Moreover, interpersonalcomparisons of the intensity, duration, certainty, or propinquity of the individuals feelings, are ruledout – where Jevons is aware of the fact that, by doing so, the basis of Bentham’s greatest happinessprinciple is abandoned (ibid, 25-29).

However, the more subtle changes (i*) and (ii*) have significant consequences for therevision of utilitarianism too. While Bentham’s distinction of different sources and contingenciesof utility allows to verify whether some of them can be assigned a more objective, inter-personallyagreeable status, Jevons abstract notion of a compound “feeling” (modification (ii*)) cuts off thispossibility. By the same token, such an abstract notion is difficult, if not impossible, to compare andrelate to more objective notions explaining the motivation to act like human wants, needs, tastes, anddesires. 5

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of utilitarianism where the interpretation of utility in terms of desires and their fulfilment, thoughnot of Benthamite origin, still figures prominently, see, e.g., Hare (1982).

This condition is relevant, in particular, whenever pleasure, utility, or any other ultimate6

motivator of human action depends on the potentially multi-dimensional quality of goods andservices. Not surprisingly, with Jevons’ abstraction becoming the accepted view in utility theory, thequality of goods and services has been a notorious cause of complications, see Wadman (2000) fora recent survey.

The representation of utility as a one-dimensional variable significantly alleviates Jevon’smain project of reformulating economic theory in terms of differential calculus and extreme valueanalysis. (Modification (ii*) has thus been conducive to, albeit not necessary for, the discipline’slater adoption of the individual utility maximization hypothesis as a constitutive element ofeconomic reasoning – a hypothesis Bentham and the early utilitarians were not concerned with.) Itis clear, though, that, in reality, utility is multi-dimensional because actions can trigger severalpleasures or pains simultaneously. Assuming a compound “feeling” and a one-dimensional utility6

measure as in modification (ii*) can therefore result in an indeterminacy, if not inconsistency, of themarginal calculus based on that assumption.

Consider, to give an example, the act of consuming a commodity, e.g., a fountain-pen. In ahedonic perspective, fountain-pens can serve to generate pleasurable feelings in the act of writing,drawing, signing and so on (first dimension). As such it can be a substitute for pencils, ball-pens,fiber-pens, or simple steel-pens and pen-holders. At the same time, fountain-pens may generatepleasurable feelings as collectibles because of their esthetic design and precious endowment (seconddimension), or as an ‘accessoire’ expressing personal taste (third dimension), or even as a statussymbol (fourth dimension) and so on. This means that fountain-pens can simultaneously besubstitutes for a whole set of commodities entirely different from writing utensils, e.g., wristwatches, mobile phones, ties, etc. (which, in turn, can be assessed simultaneously in yet otherdimensions). Marginal rates of substitution would have to be considered in each of the dimensionssimultaneously.

To aggregate them into one compound substitution rate as envisioned by Jevons and requiredby his “principle of indifference” – the backbone of utilitarian reasoning ever since – one would haveto assume that the agents consistently attach invariable weights to all dimensions. However, giventhe enormous complexity of the task, inconsistencies are rather likely. They can arise either fromframing and anchoring effects (well-known from behavioral decision theory, see Kahneman 2003)or simply from incomplete cognitive representation of all relevant dimensions. Moreover, weightsare likely to vary subject to learning, communication, social comparison processes and many otherinfluences. As will turn out, the two problems undermine the significance of the principle ofindifference both as an empirical criterion in a positive theory of action and as a benchmark formoral judgements in a normative theory.

Jevons’ more subtle modification (i*) – attributing utility to quantities of commodities rather

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By conditioning utility by “understanding” and “consciousness”, Bentham (1948, Chap. VII)7

had been eager to emphasize the knowledge-based, cognitive and social contingencies in enjoyingpleasures or avoiding pains. As will turn out below, these contingencies are importantfor understanding how preferences are formed through interactive learning processes at both thesensory and the cognitive level.

As later shown by Houthakker (1950), revealed preference theory is indeed observationally8

equivalent to ordinal utility theory, if the consumers’ preferences are transitive (i.e. if the “strong

than the action of consuming them – is conducive to further stream-lining utility theory for thepurpose of a simple marginal calculus. First, replacing actions by commodity quantities takes thetime dimension out of the calculus. While actions like, e.g., consumption develop their hedonicconsequences over time, commodity quantities have no such time dimension – which makes a staticmarginal calculus feasible. Second, when utility is attributed to actions, utility hinges on theintentions the agents’ pursue with their actions and on their knowledge of means-ends relationships.By attributing utility directly to commodity quantities, these potentially problematic (unconfirmed,uncertain) contingencies of instrumental knowledge are no longer reflected in the utility assessment. 7

IV. Positivism and the Reduction of Utility Theory to a Theory of Demand

The theoretical developments after Jevons focused on working out and refining the mathematicaldetails of a utility calculus, understood as a positive theory. In the beginning 20 century, writers liketh

Edgeworth, Fisher, and Pareto wrestled with the problem of finding a representation of utility theory(or of what calculus had left over of it) in terms of a proper utility function. From the 1930s onwards,the transition from cardinal to ordinal notions of utility prepared the ground for further “progressionin mathematical thought” (Samuelson 1947, 92). The problem was that the few empirical conjecturesthat utility theory entails (decreasing marginal rates of substitution; the law of indifference implyinga downward sloping demand curve) all hinge on the shape of the individuals’ utility functions. Yet,what the utility functions which people were supposed to have really looked like was unknown.Hence it was not known either whether the well-behaved functional forms that had been discussedas candidates were empirically relevant.

One approach to solving that problem, suggested by Hicks and Allen (1934), was to deduceimplications of the theory that should be observable at the level of market demand curves, i.e. toderive, or rationalize, the law of demand. Utility theory is transformed into demand theory. Adifferent approach, namely a logical reduction of utility theory to a theory of subjective preferenceorderings, was suggested by Samuelson (1938). The theory of revealed preferences, as he called it,was supposed to rely exclusively on operational terms – prices, quantities, and income – and apostulate of consistent choice behavior (the “weak axiom of revealed preference”). The theoryshould be logically equivalent to ordinal utility theory and should therefore allow to deduce well-behaved demand functions without recourse to the very concept of utility. Moreover, by the8

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axiom of revealed preference” holds).

An individual’s preference ordering over alternative bundles of commodities is inferred from9

1 2 n 1 2 nobserving whether for any two bundles x = x , x , ..., x and y = y , y , ..., y either “x is preferredto y” or “y is preferred to x” or “x and y are equally preferred”(indifference).

See, e.g. Koo (1963), MacCrimmon and Toda (1969), Koo and Hasenkamp (1972). 10

For instance, MacCrimmon and Toda (1969) required their test persons to choose repetitively11

among different combinations of ball-pens and small amounts of money at varying prices of the ball-pens.

preference revelation method that it implied, the theory should be able to empirically reconstructfrom the individuals’ purchasing decisions under controlled variation of relative prices and totalexpenditure the hitherto unobservable individual indifference curves on which ordinal utility theoryrelied. However, the theory turned out to be neither as logically conclusive nor as powerful anempirical device as claimed. In view of its dependence on the problematic principle of indifferencethis may not be entirely surprising. 9

The consistent choice condition – whether in the weak or the strong versions of the axiomof revealed preference – is an empirical hypothesis for which the problems involved in Jevons’reduction of the multi-dimensional utility concept to a one-dimensional one (modification (ii*)) aredirectly relevant. The above discussion of this modification raises doubts as to the empirical validityof the consistency hypothesis. An empirical test of the hypothesis would have to rely on exactly thesame data that Samuelson’s procedure suggests to use for revealing the individual preferences.Hence, his theory hinges on an assumption for which it cannot at the same time provide evidence– a logical indeterminancy (cf. Georgescu-Roegen 1954a, Wong 1978, Chap. 4 and 5). It made Sen(1973) wonder whether revealed preference theory represents more than an “elaborate pun”.Originally envisaged tests of the theory by market data were not conducted. Some attempts weremade to examine it in experiments, yet the results were not very conclusive. 10

In view of the fact that the approach is not only based on the problematic consistencyassumption but also on several idealizing assumptions that are difficult to meet in experiments, theinconclusiveness of the tests may not be surprising. Two of the idealizations are known from Jevons:the abstraction from the time dimension (Jevons’ modification (i*)) and the abstraction from theplurality of the source of utility (Jevons’ modification (ii*)). Regarding the neglected time dimensionthe problem is that, in an experimental setting, the preference revelation procedure means varyingover and again the relative prices of the commodities and the money amount that can be spent. Thereactions of the test person(s) to these variations are recorded. Even with only two commodities theprocedure is cumbersome and time-consuming. In such a situation it cannot per se be excluded that11

the test persons’ preferences change. However, the basically static framework of revealed preferencetheory implicitly suggests invariable preferences (a criticism already raised by Robinson 1962, p.50).For hypotheses about changes in preferences – which could be included in preference revelation

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Given the enormous complexity of the task, inconsistencies such as those induced by decision12

heuristics implying “framing effects” and “anchoring effects” (cf. Kahneman 2003) are not unlikelyto occur.

experiments – one has to theorize in one way or other about the test persons’ unobservable innerstates. This is, of course, exactly what the positivist theory of revealed preference wanted to get ridof.

Regarding the neglected plurality of possible sources of utility, a problem arises in theconcept of indifference. A test person may be said to be indifferent with respect to two alternative

1 1 2 2 1 1commodity bundles {x , y } and {x , y }, if (s)he is as much inclined to choose {x , y } as (s)he is

2 2inclined to choose {x , y }. Let x denote the quantity of fountain-pens and y that of wrist watches.The test person may now derive utility from a fountain-pen for several, simultaneously effectivereasons as illustrated above, i.e. from different source to be measured in different dimensions. Thesame can be argued to hold for a wristwatch. Consider the ‘tool dimension’, i.e. the utility derivedfrom using a fountain-pen as writing facility and from using the wristwatch as a chronometer.Assume that having several fountain-pens for writing – with different breadths of the pen, filled withdifferent colors of ink etc. – is rated more useful then having several wristwatches to determine thetime of the day. The marginal rate of substitution of fountain-pens for watches (itself strange enougha concept) may then be relatively slowly decreasing with a change in the endowment of the two.

It is not difficult to imagine, in contrast, that in the ‘collectibles dimension’, the ‘statussymbol dimension’, and perhaps also the ‘accessoire dimension’ the relative ratings and the relativechange of the marginal rate of substitution may vary just the other way round. Hence, in thisexample, no less than four, potentially different, indifference curves may result for the fourdimensions. A consistent assessment of indifference with respect to the various combinations wouldnot only presuppose a remarkable cognitive power in aggregating the various dimensions, e.g. byattributing proper subjective weights to them. It would also have to be assumed that no re-scaling12

of these weights occurs, particularly no re-scaling in response to relative price changes (which canwell be imagined, however, to affect, e.g., the attractiveness of an item as status symbol relative toits ‘tool value’).

While the theory of revealed preference did not gain much momentum as an empiricalprogram, its impact at the analytical level can hardly be underrated. It fostered an axiomaticpreference theory based only on the axioms of reflexivity, completeness, and transitivity. (Thedesired shape of logically implied the utility function and unique solutions in comparative staticsanalysis of budget changes also require the more technical assumptions or axioms of continuity,convexity, and non-satiation of preferences.) Given that all the axioms are highly idealizedassumptions, the empirical relevance of this theory is controversial (Kreuzenkamp and Barten 1995).Moreover, as compared to Bentham’s speculations about a sensory underpinnings of humanmotivation, the empirical scope of the theory is now considerably more narrow.

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i If, in addition, only two goods x and y and two characteristics z , i = 1,2 are assumed, the13

1x 1y 2x 2y ix iyutility function reduces to u = u (a x + a y, a x + a y), where a and a represent the quantities

V. Attempts at Raising Empirical Content and Realism of the Assumptions

In the last fifty years several efforts have been made to broaden the theory, to abandon someidealizations, and to improve the realism of the assumptions underlying the theory. In part, theseattempt were focusing directly on demand theory, in part they were directed at restatements of utilitytheory proper. With the early literature on linear expenditure systems (cf. Stone 1954) and distributedlags (“habit formation”) in consumption time series (Houthakker and Taylor 1966) a “pragmaticapproach” (Brown and Deaton 1972, 1151) developed, i.e. a statistical approach to demand andconsumption time series that was only loosely informed by the existing theory of demand. Based onhousehold statistics, refined regression techniques were developed and applied to economic variableschosen more or less eclectically.

Later, attempts at deriving constraints for empirical estimations from demand theory wereundertaken. They resulted, among other things, in the sophisticated consumer price index models(Deaton and Muellbauer 1980). These contributions built on various types of “well-behaved”individual utility functions and derived the properties of the demand systems by a constrained utilitymaximization calculus with additional side conditions. However, the statistical tests of the propertiesof the individual demand systems were carried out with aggregate data. Because several degrees offreedom emerge by going from individual to aggregate data, a conclusive empirical test of theunderlying utility theory was not feasible in this way. The usefulness of the elaborate maximizationapparatus has therefore never been demonstrated, and it is doubtful whether it is necessary for theempirical insights which this literature has generated.

At the theoretical level, one of the most prominent contributions is Lancaster’s (1966, 1971)“characteristics approach” which tries to provide a more sophisticated utilitarian foundation forconsumption theory. He assumes that it is not goods per se that consumers derive utility from butrather the “characteristics” or intrinsic quality features of the goods. He introduces an ordinal utilityfunction u = u (z) that has standard properties except that, as arguments of the function, the quantitiesof goods are replaced by the vector z representing the quantity of characteristics which the goodspossess. Goods usually have more than one characteristic and many of the characteristics may beshared by more than one good. The relationship between the goods and their characteristics isdetermined by the present state of the consumption technology. The latter is assumed to be‘objectively’ known to all consumers and to inform the way in which they make use of the goods intheir consumption activities. A wrist watch, to use that example again, may thus be thought of aspossessing characteristics in the form of its color, its form and size, the number and specification ofmechanical complications, the quality and weight of the various materials of which it ismanufactured, the number of exemplars that have been sold, and so on. Under the simplifyingassumption that only one good is involved in each consumption activity (like the wrist watch inmeasuring the time), the consumption technology can be described as a linear transformation of thecommodity space into the characteristics space. 13

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of the i-th characteristic possessed by one unit of the corresponding good.

As mentioned before, a homogeneous utility measure can only be assumed, if the consumers14

attach, in a consistent way, subjective weights to the different dimensions from which they deriveutility in their sensory experience. Coefficients which are supposed to reflect ‘objective’

ix iytechnological features (such as a and a ) cannot represent such weights. They can, however, betaken to represent the relationships between the ‘objective’ characteristics of goods and the differentdimensions of sensory experience, as the case of the wrist watch may exemplify. Some of thecharacteristics of wrist watches appear to be relevant to only one of the possible dimensions (abovealluded to as the functional dimension, the collectibles dimension, the ‘accessoires’ dimension, thestatus dimension, etc.), some to several or even all dimensions. Conversely, for each singledimension, several of the characteristics seem to be relevant simultaneously. Interestingly, indiscussing the empirical relevance of characteristics for consumer choices, Lancaster (1971, 146-147) leaves his purely formal set-up and takes recourse to psychological conjectures in the form ofthe theory of want satisfaction.

As Steedman (2001, chap 2) has shown, the importance of time as an ultimate constraint and15

the marginal conditions for maximizing utility over alternative uses of scarce time were clearlyformulated by Gossen as early as 1854. Steedman (ibid., chap. 5) also makes clear that economizingon time cannot be framed other than as a problem of choice between actions differing in their time

Lancaster’s contribution has the merit of drawing attention to the largely neglected, buteconomically significant, quality dimension of goods and services (cf. Wadman 2000, Chap. 6).However, as an otherwise unchanged extension of modern utility theory it shares all of Jevons’simplifying assumptions (i*) - (iii*). It firmly rests on a homogeneous utility measure. Hence, thesubstitution of the arguments notwithstanding, Lancaster’s utility function does not account for theconcerns of sensory utilitarianism with the heterogeneity (the different dimensions) of utility. Nor14

does it change the attribution of utility to commodities. Despite its reference to activity analysisutility is ultimately – after some transformations via the characteristics – not attributed to activities.

In contrast to Lancaster’s contribution, the theory of the allocation of time and his householdproduction theory by Becker (1965, see also Michael and Becker 1973) is an attempt to raise therealism of the assumption of utility theory that indeed departs from Jevons’ restrictive modificationsof the utilitarian program at least in one respect. As in the simplified version of Lancaster’s model,Becker assumes that the household obtains utility from “productive activities” in which purchasedmarket goods and services are an input. Unlike in Lancaster, the household’s time is also consideredan input to the productive activities. This means that, contrary to Jevons’ modification (i*), utilityis attributed to actions rather than commodities. The action on which Becker focuses are evaluatedbytheir consequences (called somewhat misleadingly “household commodities” and their services) onthe basis of a utility function with standard features. Since the way in which household time andpurchased goods and services are combined is again considered a matter of an ‘objective’ householdproduction technology, the utility function is assumed to be maximized subject to given prices andmarginal productivities of the inputs, an income constraint, and a time constraint. 15

13

intensity.

Cf. Menger (1950, 131). As explained in Section II, this principle was also endorsed by16

Jevons – who called it the “law of human wants” – although it was inconsistent with his ownapproach.

The immediate consequence of this extension is the resurfacing of the time dimension as acrucial aspect of economic behavior in general and consumption in particular. Indeed, alternativeuses of time – i.e. decisions between alternative household activities of different quality whichcannot be conducted at the same time – are the very point of Becker’s theory and its applications.It is not the place here to discuss these applications which revolve around the comparative statics ofthe households’ time allocation, consumption behavior, labor supply, specialization patterns amonghousehold members, fertility decisions etc. under changing relative prices and productivities of theinputs to the household production processes. The wide range of phenomena addressed shows thatBecker’s approach develops a remarkable heuristic potential when compared to what is feasible onthe basis of the standard utility maximization approach. Nonetheless, the theory and its applicationsare still subject to the criticism leveled above against Jevons’ modifications (ii*) and (iii*), as theseare kept in place despite the reference which Michael and Becker (1973) make to Bentham.

It therefore seems worthwhile to go further in increasing the realism of the assumptions ofutility theory and to make an attempt to also revoke Jevons’ modifications (ii*) and (iii*). Thealready mentioned work by Kahneman, Wakker, and Sarin (1997) goes in that direction. Besidesmodification (i*), these authors also revise modification (iii*), i.e. return to Bentham’s interpretationof utility as a measurable (though not necessarily inter-personally comparable) variable. Yet, theystill maintain the notion of a homogenous utility measure as introduced by Jevons’ modification(ii*). Bentham’s idea that there is a multiplicity of sources or dimensions of utility, i.e. that utilityis no homogeneous variable, still needs to be reconsidered. As will be argued in the next section, that step may even be suggested by the insights on economicbehavior that the long-standing theories of needs or wants provide – theories that are independentof the utilitarian tradition.

VI. Back to a Theory of Needs?

The concept of needs or wants (used interchangeably here) as motivators of human action goes backat least to Plato. From the outset, it has been associated with the idea of a hierarchal order of wants.This non-utilitarian approach also played a role in the marginalist revolution where it was advocatedby Menger (1950, first edition 1871, chap. 1) who submitted that there is a demand for goods,because people have needs (or wants) and have learnt that they can be satisfied by these goods. Thereis hardly any case, Menger observed, where one want can be served by only one good, or where acomplex of goods serves one, and only one, want (ibid. 129). He also elaborated on the hierarchy ofwants or, as Georgescu-Roegen (1954b) has called it, the “principle of the subordination of wants”.

The principle can be interpreted to imply that, if another want always appears after the next lower16

14

has been satiated, an individual’s total demand or consumption will never be satiated. Indeed,Menger considered human wants to have a potential to develop beyond all bounds (ibid., 82-83).

All these conjectures are far from being empirically refuted. Nonetheless, all of them havedisappeared from the economists’ discourse on demand and consumption today. This was differentuntil after WWII. Writers dealing with consumption theory like Duesenberry (1949, Chap. 1),Georgescu-Roegen (1954b), Abbott (1955, Chap. 4), and Ironmonger (1972) still based theirarguments on elaborate notions of wants and physical needs. In doing so they tried in some cases tocombine or reinterpret the theory of wants with utilitarian terminology. An example is Georgescu-Roegen’s (1954b) splendid comparison between axiomatic preference theory and the older literatureon wants – a remarkable antidote to the positivist fashion of his time.

Georgescu-Roegen avoids a precise definition of wants. But the way he uses the concept and,in particular, attributes indifference curves to wants makes it plain that an action that serves thesatisfaction of a specific want is considered equivalent to an action that generates a specific utility.This means that a want or need is assumed to correspond to exactly one source or dimension ofutility. Since the consumers have a large, probably infinite, number of wants, there are as manydifferent sources or dimensions of specific utility as there are wants. With his “principle of theirreducibility of wants” Georgescu-Roegen insists that the multiplicity of wants (or sources of utility)cannot be lumped into just one catch-all want. However, precisely this has been done, he notes, “ina veiled passage” by “the founders of marginal utility theory” with their concept of utilityrepresenting “the unique want into which all wants can be merged” (ibid. p.515). Obviously, Jevons’modification (ii*) is attacked here, and the vehicle Georgescu-Roegen suggests to overcome it is thetheory of wants.

In Georgescu-Roegen’s interpretation of wants, their hierarchical order is a central argument.He claims that the choice of actions is directed towards satisfying wants in a decreasing order ofimportance. Want satisfaction can usually be achieved by actions involving a set of alternativecommodities. Moreover, each of the commodities may be involved in satisfying yet other wants, i.e.provide utility in yet other dimensions. Water can, to take Menger’s example, be used to satisfy thewant to drink, but also wants which Georgescu-Roegen refers to by the actions of “cooking”,“washing”, “laundering”, “watering the grass”. The order of importance of these wants is supposedto be drinking, cooking, washing, laundering, watering the grass. More specifically, the next lowerwant is assumed to manifest itself only after satiation has been reached at the level of the higher one.Yet, it is not clear how precisely the “satiation” level is determined here.

Georgescu-Roegen’s approach was later taken up by Ironmonger (1972) whose motivationis, however, slightly different. Interested in consumer innovations he recognizes that “without somedistinction between various types of wants, there is no place for considering a change in the qualityof a commodity or the introduction of a new commodity to the market” (ibid., 13). Like Georgescu-Roegen, Ironmonger acknowledges a multiplicity of wants which “...are assumed to be so orderedthat at a given income and prices the consumer will satiate as many wants as possible, going downthe order of priority from the most important to the least” (ibid., 23). Yet, unlike Georgescu-Roegen,

15

As in Lancaster (1966), commodities thus affect the consumer’s utility indirectly in a way17

that is mediated by consumption technology. In Lancaster’s case, the technical characteristics of thegoods enter the individual utility functions directly. In Ironmonger (1972, Chap. 2) the technicalfeatures of the goods generate, when consumed, a certain number of units of satisfaction of a want.Only the latter enter the individual utility functions.

Regardless of how the weights are attributed, an analysis of the implications in the style of18

textbook demand theory becomes rather involved already for the comparatively simple case oflexicographic preferences between wants as the elaborations in Georgescu-Roegen (1954b) andIronmonger (1972) show. (This would be even more true if there are substitutes for satisfying aparticular want and complementarities between goods satisfying different wants as claimed byMenger). Georgescu-Roegen suspects that, for reasons of tractability, the principle of indifference– established by the marginalist revolution qua its simplifications – may no longer be assured itscentral status in a richer theory. Yet, this may not be all that has to be sacrificed. An abstractionstrategy conveniently adapted to Jevons’ strongly idealizing modifications (i*) - (iii*) can hardly beexpected to work as smoothly under more complex conditions. In reviving sensory utilitarianism amajor task will therefore be to find ways of reducing the complexity by developing other, bettersuited abstraction strategies to analyze the implications.

he explicitly presumes that the number of units of satisfaction of all these different wants can bemerged to give a homogeneous utility measure. The measure induces a preference order over wants17

(rather than commodities). More precisely, Ironmonger argues that because of the hierarchical orderand the satiability of wants, the preference order is lexicographic. He goes on, on this basis, todetermine optimal budgets by means of linear programming and to analyze, in the usual fashion, thecomparative statics of choice and the effects of quality differentiation and new commodities.

Both Georgescu-Roegen and Ironmonger thus demonstrate that the analytical tools of modernutility theory can be used for representing several aspects and implications of the theory of wants.Conversely, they show that the theory of wants can be an inspiration for discussing what a utilitariancalculus could look like when Jevons’ simplifying modifications (i*) and (ii*) are revoked. Indeed,if one accepts Ironmonger’s way of homogenizing the various wants, the only major formaldifference to standard utility calculus reduces to the assumption of a lexicographic preference orderover wants which may, but does not have to, translate into lexicographic preferences betweencommodities. However, Ironmonger’s lexicographic interpretation is not the only possible, andprobably not the most adequate, one to account for the fact that different wants have differentpriorities for the agents. As mentioned above, the subjective importance or priority which thedifferent wants (or sources of utility) have for the agents at a given point in time can be expressedby subjective weights. If these weights are attributed in a consistent way, they can be normalized sothat they always sum up to one. Except in the limiting case, where, at successive points in time,always only one want has relative weight 1 and all others weight 0, these weights do not express alexicographic preference between the wants. 18

The question that remains is whether the distribution of subjective weights over wants (or

16

Wilson (1998), one of the protagonists of sociobiology, for example, argues that these19

developments provide connecting principles by which the vast body of knowledge about humanbehavior accumulated in the sciences can be tied together and made available for a naturalisticapproach in the social sciences and economics. He writes (ibid. 204-205): “To infuse psychologyand biology into economic and other social theory ... means teasing out and examiningmicroscopically the delicate concepts of utility, by asking why people ultimately lean toward certainchoices, and being so predisposed, why and under what circumstances they act upon them.”

sources of utility) can be determine more precisely? More particularly, are there any inter-personalsimilarities in these distributions – expressing, perhaps, something like human universals – whichwould qualify Jevons’ verdict against measurability and inter-personal comparisons (modification(iii*))? An answer to these questions seems to require a better knowledge of what human wants (orthe sources of utility) are. When, in the history of economic theory, the notion of wants was used,the authors – Menger, Georgescu-Roegen, and Ironmonger being no exception – have usuallyreferred to examples chosen ad hoc. A systematic analysis of needs or wants and the relationsbetween them is lacking. In the following an effort will therefore be made to provide such an analysisin the light of modern behavioral theory, i.e. by adopting a naturalistic perspective on economicbehavior.

VII. A Naturalistic Perspective on the Utilitarian Approach

Whereas the utilitarian approach to human behavior has ever more been transformed into ananalytically advanced, but empirically narrow, axiomatic theory, the development in the behavioraland human sciences has been taking a different route. Their naturalistic approach to human behaviorand its motivational underpinnings was further expanded, in recent decades, by sociobiology (Wilson1975), evolutionary psychology (Barkow, Cosmides, and Tooby 1992) and a new sensory hedonism(Kahneman, Diener, and Schwartz 1999) that raised questions directly related to core issues of theearly sensory utilitarians. It seems tempting to take up these new developments to reappraise the19

possibility of a naturalistic, sensory utilitarianism in the light of their results. As argued elsewhere(Witt 1985, 1991, 1999, 2003, Chap. 1), the point to start from is the genetic endowment of humans,the ultimate, evolutionary basis of behavior and its adaptability.

Thus, let us assume that not only the physical traits of the individual exemplars of a species,but also some elementary patterns of behavior are innate, i.e. genetically determined. If so, they mostlikely have emerged by natural selection on the basis of genetic adaptation – and still may, or maynot, be subject to adaptation by natural selection. This depends on the intensity of selection pressurethat the species is exposed to. In sociobiology, dealing with the behavior of social animals, it isassumed that selection pressure is significant and shapes the animals’ behavior in social interactions(Wilson 1975). The working hypothesis therefore is that whatever genetically coded behaviorprovides an advantage in accessing scarce resources like food, territory, status, mating partners thattranslates into differential reproductive success will then be selected for. If there is enough time,better fit behavior will spread out in the population.

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In pre-industrial societies, in contrast, there is some evidence for a positive correlation, cf.,20

e.g., Chagnon and Irons (1979).

This is the basic hypothesis of evolutionary psychology, cf. Barkow, Cosmides, and Tooby21

(1992). However, with its attempt to reconstruct genetically coded features of the human cognitivesystem (assumed to reflect the demands of the past), evolutionary psychology focuses mainly ondecision making behavior and its biases, see Gigerenzer and Goldstein (1996), problems that are notcenter stage here.

The relevant period of time is specified by Trivers (1971) as the Pleistocene, i.e. the epoch22

from five hundred thousand to one million years ago.

It is likely that in humans some forms of behavior and of behavior adaptation are innate, too.Moreover, in the human economy, access to scarce resources like income, wealth, security, also playa central role. Nonetheless, it does not seem probable that economic behavior, as observable today,can be explained by its genetic fitness alone. Even if some innate behavioral traits imply anadvantage in the competition for income, wealth, security, there is no evidence that this advantagetranslates into a higher reproductive success. To the contrary, testing the correlation between income,wealth, security and reproductive success, Maddison (2001, Chap. 1) shows in a cross countrycomparison that the more per capita income in real terms increased from 1820 to 1998, the moreboth birth rates and population growth went down. 20

The apparent paradox can be resolved if the following is taken into consideration. For naturalselection to produce a systematic tendency, there must be sufficient inertia in the population of(behavioral) traits on which selection operates. Yet, given the rather slow pace at which geneticfixation works out (some thirty generations at minimum), the observable human behavior adaptation-- in the modern societies often enough within a single generation -- is much too rapid to ensuresufficient inertia. This is true, in particular, for changes in economic behavior where the influenceof learning processes and intelligent intention cannot be ignored. Independent of this, it is not clearwhether there is still a notable selection pressure on humans in present times. Modern humans seemto be able to master their environment to such an extent that most cultures (except some verymarginal ones) have achieved a status of ‘reproductive affluence’: despite remarkable differencesin the way of life and in economic wealth, they all are successful in terms of reproductive capacity(Wilson 1975, 550).

If it is true that fierce selection pressure on humans is lacking there is little, if any, systematicgenetic adaptation going on anymore. The human genetic endowment in general and the innatepatterns of behavior in particular should then be the result, it can be argued , of adaptions to21

environmental conditions in the earlier phases of human phylogeny in which selection pressure wasstill tight. For the motivational aspects on which the utilitarian approach focuses, two very22

elementary, non-cognitive features of human behavior seem to be the remnants inherited from thosetimes. The one is the role that the deprivation of needs plays as an elementary motivator of action.The other – based on such motivational forces – are the elementary learning processes of

18

See Pulliam and Dunford (1980, 11-44). All forms of pain induce a motivation to act in a way23

that pain is relieved or avoided, except in the case of learnt helplessness.

Cf. Millenson (1967, p. 368). The adaptive value of these reinforcers is obvious. 24

instrumental conditioning and conditioned reinforcement.

A state of deprivation is easily identified as far as the physiological needs of an organism areconcerned. It occurs as a consequence of some physiological tension, deficiency, or imbalance, likethe feeling of hunger when the organism’s metabolism lacks energy in the form of nutrition.Deprivation with respect to some need motivates the organism to act to reduce or remove deprivationas, e.g., in the case of hunger, a motivation for foraging behavior is triggered. The deprived state, andthus the motivation to act, vanishes when the corresponding needs are satiated. Deprivation not onlyoccurs with respect to obvious physiological needs (air, water, sleep, food, body heat), but also withrespect to needs based on more complex reactions in the organism. Thus, deprivation that motivatesto act has been argued to occur with respect to, among others, physical activity, achievement, arousalof the senses or the cognitive system – all relative to specific ranges of the corresponding stimuli –internal consistency, social (status) recognition, sex, care, and affection. In a utilitarian manner,deprivation can in all these cases be interpreted as a sensory perceptions classified by innate neuralprocesses as a form of pain. Its reduction or removal relieves that form of pain, which is apleasurable feeling. 23

On this elementary motivational basis, instrumental conditioning works as follows. If, inresponse to deprivation in some need, several actions are undertaken of which one is successfullyreducing deprivation, this rewarding experience leads to reinforcement, i.e. an increase in thefrequency of that particular action relative to the other actions (as long as deprivation is present orreemerges). Conversely, an action followed by an aversive – ‘penalizing’ – sensory perceptions ofpain is not only discontinued, but also motivates active avoidance behavior which, when successfulin relieving pain, is reinforced. The evidence for instrumental conditioning is overwhelming(Herrnstein 1990). Apart from relief of pain or fear, a reinforcing effect has been observed for actionsthat are rewarding in the sense of reducing deprivation with respect to exactly the just mentionedneeds. Thus, air, aqueous solutions, sleep, food, keeping body heat, physical activity, achievement,arousal, internal consistency, social (status) recognition, sex, care, and affection have been found towork as reinforcers. Since they are shared by humans and even many animal species, they seem24

to have a genetic basis and are therefore called innate or primary reinforcers here.

Conditioned reinforcement or conditioning learning is a different process. Imagine an actionthat successfully reduces deprivation and another action that triggers a neutral experience, i.e. asensory perception that is neither pleasant nor unpleasant. Assume that over time both actionsrepeatedly coincide so that an association is learnt between the two. Once such an association isestablished, the originally neutral action becomes a rewarding experience in its own right. Aconditioned (secondary or acquired) reinforcer is established that works even if the previouslycoinciding primary reinforcement is dropped. (The strength of a conditioned reinforcer fades,

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however, if the association on which it is based is not at least occasionally corroborated.) Anexample may illustrate this feature of human behavior. Imagine taking repeatedly a good meal whenhungry in the company of some other people and/or in a special environment characterized byparticular aesthetic aspects like scenic architecture, furniture, tableware, table music etc. Assume thatboth the other people’s company and the special environment are initially a neutral experience. Ifso, the association that is learnt between good eating and the company and/or the specialenvironmental features then has the following effect. The company and/or the aesthetic aspects ofscenic architecture, furniture, tableware, table music etc. become a rewarding experience in their ownright – a conditioned reinforcer – so that joining the company/ entertaining oneself with the aestheticaspects increases in the frequency with which they are chosen – even if no longer coinciding witheating activities.

Given the powerful associative capacity of the human brain it is easy to imagine that anelaborate structure of conditioned reinforcement can emerge in this way over an individual’s lifetime from the few innate reinforcers. Unlike the widely shared primary reinforcers, this structure isof highly idiosyncratic nature and shows an enormous inter-individual variety. Moreover,conditioned reinforcers are culturally contingent, given the strong influence that the particularcultural environment of an agent has on what associations she or he happens to be learn. (There isalso some accidental element in what kind of experiences an agents learns to find rewarding as aconsequence of her or his conditioning history.) It would make little sense, therefore, to produce alist of learnt reinforcers comparable to that of the limited number of innate ones. Agents in similarlysocialized groups or similar cultural environments may show less variety in the conditionedreinforcers than agents from different backgrounds. The huge variety of individually learntreinforcers not withstanding, there also seem to be a few that are learnt by almost everyone. One ofthese universal conditioned reinforcers, it can be conjectured, is money.

Innate (primary) reinforcers and learnt (conditioned) reinforcers differ with respect to therelationship between deprivation and motivation. The motivation to act that is triggered by needsunderlying innate reinforcers varies with the strength of deprivation (and disappears with satiation).In the case of learnt reinforcers there is no specific need deprivation (and no specific satiation either).A motivation to act is present, particularly when the organism is currently deprived in relation to theinnate reinforcer on which the learnt one is conditioned and no action reducing that deprivation isavailable. When an action is able to reduce deprivation with respect to several needs simultaneously,a motivation to take that action exists as long as satiation is not yet reached with respect to allrelevant needs. When such an action coincides with an originally neutral one, and a learnt reinforceremerges, this is conditioned simultaneously on the corresponding set of innate reinforcers.

VIII. A Theory of Needs and of Utility Derived from their Satisfaction

Returning to Bentham’s identification of utility with “enjoyment of pleasures, security from pains”,a naturalistic interpretation of utility theory is now straight forward. As the original utilitarianapproach, it should be explicit about what it is that people derive utility from (or reveal as being

20

preferred). Accordingly, the following is suggested:

Hypothesis 1 Utility emanates from the rewarding sensory perception caused either by reducingdeprivation in one or several needs underlying innate reinforcers directly or as aconsequence of conditioned reinforcement (ignoring for the moment the relieving ofpain).

With this hypothesis, we are back to Bentham’s original assumptions (i) - (iii), albeit on a basis thathas taken advantage of the large body of insights on human behavior that have been gained in thebehavioral and human sciences since Bentham. Utility is an attribute of actions (assumption(i)). Itis a multi-dimensional variable (assumption (ii)), because one action can generate rewarding sensoryperceptions by reducing deprivation with respect to several innate reinforcers simultaneously or asa consequence of several conditioned reinforcers. Being a sensory perception, utility is a measurablequantity that can be observed (assumption (iii)).

Since utility theory is about what motivates human behavior, the question to be asked nowis in which way the reinterpretation of the utilitarian position in hypothesis 1 contributes toexplaining the agents’ actually observable choices of actions. In general, it should be expected thatthe strength of the motivation to take an action corresponds to the utility that can be derived fromthat action – the higher the utility, the greater the motivation to take that action. However, how dothe individuals know what utility they can derive from a particular action, if there are several actionsto choose from, and if they may differ with respect to their effectiveness in providing the rewardingexperience? This is a problem of learning over time what actions deliver what kind of sensoryexperience. Obviously there are opportunity costs to choosing an action, since the time and resourcesused for it to reduce deprivation cannot be used for reducing deprivation in other ways. To put itdifferently, the learning task implies recognizing a resource constraint and a ‘satisfaction technology’concerning the generation of a certain intensity of sensory perceptions. If the agents always perfectlyknew both, they could settle right away with the action delivering maximal utility. However, thisassumption is usually a counter-factual one.

The connection between utility and reinforcement that has been suggested in hypothesis 1offers a different and rather simple solution for the learning problem – if the learning is a non-cognitive one. For each particular innate need in isolation, by instrumental conditioning those actionsthat are more rewarding (allow to derive a higher utility with the given resource constraint) arechosen more frequently over those that are less rewarding. The learning process thereforeconvergences to a choice of actions that follows the “matching law” as predicted by the theory ofinstrumental conditioning (extensively tested in experiments with many species, see, e.g., Herrnstein1990). The isolated need satisfaction that can be artificially arranged in controlled laboratoryexperiments is, of course, not the kind of situation economic agents are faced with in reality.

As an attribute of actions that can generate rewarding sensory perceptions in severalindependent reinforcement dimension, utility has been argued to be a multi-dimensional variable.Obviously, this poses a much more complex learning task. Nonetheless, at least for a limited set of

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feasible actions as it is characteristic of their natural environment, animals can be observed to copewith it by instrumental conditioning. In the highly developed human economies with their excessivenumber of action possibilities the difficulty of the task may threaten a consistent solution. To beconsistent in solving the problems requires that the individual agent is capable of a kind of utilityaccounting by which the various dimensions are aggregated in such a way that the utility derivedfrom different actions can be compared (the problem that Jevons assumed away by simplypostulating a one-dimensional utility variable in his simplification (ii*)). The problem is furthercomplicated by the fact that the large number of choices is likely to give rise to the building up ofextensive structures of conditioned reinforcers.

Let us assume for the moment that the utility accounting problem is solved. Instrumentalconditioning would then settle with a situation captured by the matching law, now based on theaggregated utility values. This means that, to the extent to which human behavior is determined bynon-cognitive learning alone, the strength of the motivation for the various actions (as indicated bythe reward in terms of utility derived from them under the given resource constraints) matches withthe probabilities for those actions to occur. Given the identification of utility with sensoryperceptions as in hypothesis 1, the following could then be concluded with regard to the question ofwhat the distribution of actions will look like that eventually occurs and what determines thisdistribution:

Hypothesis 2 The probability distribution over the set of actions from which an agent is about tochoose at a given point in time reflects (i) the relative degrees of deprivation theagent experiences at that time with respect to her or his several needs, (ii) the relativeefficacy of the actions in reducing deprivation in the various needs, given theconstraints in time and resources on each action, (iii) the learnt association withconditioned reinforcers.

In this context it should be noted that the deprivation dynamics of different needs follows differenttime patterns. Furthermore, there are significant differences with regard to how easily a satiationlevel can be reached with given resource constraints (a point to be taken up further below).

While hypothesis 2 is likely to be confirmed in laboratory experiments with animals (not leastbecause the number of deprived needs can quite easily be controlled and manipulated) whosebehavior adaptation is subject only to instrumental conditioning and conditioning learning, humanbehavior can be more complex than that. The animals’ instinctive choice of an action depends onthe instantaneous strength of the sensory perception. In humans, in contrast, the choice of an actionis very often not an instinctive response, particularly in the economic context. For that reason, it isnot necessarily the instantaneous strength of the sensory perception (“instant utility” in Kahneman,Wakker, and Sarin’s terminology) alone that is decisive. The motivation to act is often mediated bycognitive reflections by which not only future sensory perceptions may be anticipated and taken intoaccount, but also cause-effect or means-ends considerations. Both condition the relationshipsbetween utility on the one hand and action motivation and action probability on the other in complex

22

An example given by Kahneman, Wakker and Sarin’s (1997) in their measurement of instant25

utility may be used here to illustrate the difference. The authors report data for the intense pain thata colonoscopy treatment can cause in patients, undoubtably a very strong sensory experience. Anaction capable of reducing an instantaneously dominating feeling like this would be a mostrewarding experience and, hence, be most likely to occur. Indeed, the instinctive response is escapebehavior as it would be observed with probability close to one for, say dogs or monkeys.Colonoscopy can therefore only be applied on animals, if either the pain is suppressed by anestheticsor the animal’s body is mechanically fixed. For humans, in contrast, this is not necessary. By theircognitive abilities they are able to intervene into the instinctive reaction pattern. Once they startreflecting their situation, they can recognize the instrumental character of the colonoscopic treatmentfor avoiding future painful experiences and motivate themselves to suffer the pain, provided they donot discount future pains too much in the trade-off with present pains.

ways. 25

IX. Utility and Knowledge – Cognitive and Non-cognitive Learning Interacting

Since the reinterpretation of sensory utilitarian theory in terms of very elementary motivational andbehavioral features of deprivation and non-cognitive learning suggested above is not meant to implythat the theory is confined to that elementary behavioral level, the cognitive influences on themotivation to act have to be dealt with in some way. Such an endeavor is faced with two variants ofthe other-minds problem well known in epistemology One is that of verifying an individual’s internalutility accounting by the outside observer, the other that of gaining insights into the individuals’cognitive perceptions and interpretations of their situation. Fortunately, these two problems do nothave to be solved as long as one does not wish to explain or predict individual actions. The twoproblems also confront modern preference theory, although its idealizing assumption often make thisforget. Precisely because they are unresolved, Samuelson’s plan of revealing the individuals’complete preference order in controlled experiments or even by observing their market transactionsis unreal and has been abandoned. The focus was shifted instead to deriving generic quantitativefeatures of economic behavior like the law of demand that do not require addressing the twoproblems.

Following a similar strategy, focus will be shifted further below to the qualitative genericfeatures that the hypotheses suggested here imply for human behavior, particularly income spending.As will turn out, these generic features are relevant to our moral intuition and may already providesufficient information to start reflecting on the moral implications of the reinterpreted utilitarianposition – avoiding Bentham’s naive inter-personal utility accounting. Before proceeding in thatdirection, it is useful, however, to first explore the role of cognitive interventions into the elementarymotivational regularities postulated in hypotheses 1 and 2.

Economic agents tend to reflect many of their actions. They learn at the cognitive level bytheir own experience and by observing others how to create, and/or adapt to, new action

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Communication with, and the observation of others is an important factor in shaping26

individual attention processes (Bandura 1986, Chap.2). Information is more likely noticed and

opportunities. These processes can intervene in and change the non-cognitive behavior patterns andbehavior adaptations. It is difficult to predict at a more general level how these cognitiveinterventions affect behavior, because their outcome hinges on the current individual perceptions andinterpretations that can at best be reconstructed for individual cases on the basis of situational logic.A few generic effects can, however, be derived from certain constraints of the human cognitivesystem that imply inter-individually comparable interactions between cognitive and non-cognitiveexperiences.

Despite its unsurpassed intelligence, the human cognitive system is severely constrained inboth the kind and the capacity of its information processing. If information is offered in abundanceto the cognitive system, attention must therefore selectively be allocated to competing processingdemands. Of the information entering the cognitive system at any given point in time, spontaneousselective attention processes filter out that information that will be processed further and stored inmemory. What pieces of incoming information grab attention depends on both their physically basedattributes and their meaning-based attributes (cf. Anderson 2000, Chap. 3, 6, and 7).

Meaning is identified through tracing information from memory where knowledge is storedthat has previously been accumulated. In order to retrieve elements from memory they need to beactivated selectively through cognitive cues contained in messages. Only messages that contain cuesfor which there is an associative basis in memory can have a meaningful interpretation and, by thesame token, attract attention. Since only what is gaining attention has a chance of being rehearsedin memory and, thus, of being added to an individual’s knowledge, the change of individualknowledge hinges on the already acquired knowledge. The meaning associated with a particularpiece of information often has affective connotations of liking or disliking. The latter reflect previousrewarding or aversive experiences ultimately based on reinforcement as discussed in the previoussection. In economic terminology, the affective connotations of a piece of information thereforedepend on the current state of the preferences of the individual. More specifically, this means thatthe more an agent has developed a preference for some action rather than another one throughinstrumental conditioning and conditioning learning, the more affective weight is attributed to themeaning of a piece of information relating to that action.

When attention is more likely paid to incoming information that is affection-laden becauseof already developed preference, this has an effect on how individual knowledge develops. Ifinformation related to a particular item or event attracts more attention, then that information alsotends to be more frequently attended and rehearsed in thinking and, hence, to be better cognitivelyrepresented in the individual’s action knowledge held in memory. Thus, two mutually supportiveeffects interact. One effect is the affection-driven impact of the current preferences on the selectiveallocation of attention and the incremental change of knowledge. The other effect is that of selectiveattention and gradually changing knowledge on the further reinforcement history of the individualand, thus, the formation and further development of her or his preferences. The flip side of the26

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memorized if it relates to objects of intense communication. Since the intensity of communicationcan follow social agenda-setting effects, there is also a potential for a self-augmenting process inwhat information is collectively processed in closely communicating groups.

described cognitive regularities is the relative neglect of, and the rising ignorance with respect to,other information. Memory traces that allow to retrieve a particular piece of information can onlybe established and maintained at the expense of memory traces to other pieces of information. Theless frequently and the less intensively attention is paid to an item or event the less likely it will berepresent in the individual’s action knowledge and get a chance of being involved in reinforcingexperiences.

The interaction between utility and knowledge can be summarized as follows:

Hypothesis 3 Given the selective nature of individual information processing and its interactionwith the experience of primary and secondary reinforcement, both the perception ofand, in the longer run, the preferences over action opportunities which happen tohave attracted the attention tend to become more selective and more detailed at thesame time.

Sensory perceptions become more refined and more responsive to slight differences in the stimuli.Increasing attention and occupation with information on the same or similar content allow cognitiveperceptions to grasp ever more special attributes. The consequences of hypothesis 3 may be calledan interactive ‘refinement’ both of individual utility perceptions and knowledge. Because of thelimited information processing capacity the flip side of this effect is an increasing specialization inin taste, knowledge, and individual activities. Thus, it is not possible to characterize in a generic wayhow cognitive intervention changes the probability distribution over actions that has been postulatedas a result of the non-cognitive features of human behavior in hypothesis 2. Yet, it is at least possibleto state a regularity in hypothesis 3 as to how action choices tend to systematically develop intogreater refinement and a kind of specialization.

X. Implications: Learning to Consume as Income Rises

One of the most dramatic economic changes that have occurred over the past 20 century is theth

historically unprecedented increase in labor productivity in the developed and many of thedeveloping countries as a consequence of improved technological knowledge and the capitaldeepening of the production processes. This has made possible an increase of per capita income bythe factor three to six in the different countries in real terms over the century (Maddison 2001, Chap.1). Consumer spending has closely followed this development and has grown by similar magnitudes– creating the impression of seemingly insatiable consumers (cf., e.g., Lebergott 1993).

However, the drastic expansion of consumer spending was not equally distributed over allconsumption categories. To the contrary, over the hundred years there are massive changes in the

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The ambiguity of the term “consumption” reflects the etymology of a word that has been used27

for an increasingly broader set of phenomena as organization of the economy evolved from thesubsistence economy of self-supporting households to increasingly differentiated division of laborand market exchange.

compositions of goods and services consumed. Moreover, within each of the consumption categoriesthe quality of existing goods and services is constantly differentiated. The variety of new goods andservices introduced to the markets has increased steadily. It is often claimed, therefore, that vicariousentrepreneurs at the supply side of the markets have found ways to offer new or better productsappealing to consumer preferences for which there have previously been no suitable offers. Hence,it is argued, the continuously upheld motivation among the consumers to expand expenditures. Yet,this argument is difficult to accept or refute as long as it is left unspecified what preferencesconsumers actually have. The hypotheses presented in the previous sections allow to make progressin this point. Concrete implications can be derived with respect to how rising per capita income islikely to be spent that go beyond a mere classification of income elasticities as follows.

To recapitulate, some sources of utility – and the corresponding motivation to act – have beenidentified in hypothesis 1 with the removal or reduction of deprivation in physiologically determinedactivities like breathing air, drinking aqueous solutions, eating food, or pain relief. But air, aqueoussolutions, food, and medicine are not only innate reinforcers based on physiological needs. They arealso consumption items that are, more or less, distributed through market transactions. They are‘consumed’ in the literal sense of eating up. A significant feature of that kind of consumption is thatit is subject to temporary physical satiation Except in cases of mistaken physiological controls, themotivation for additional consumption vanishes as the satiation level is approached. Consumptionbeyond the satiation level does not create additional satisfaction – it sometimes even inducesincreasing aversion. On the other hand, consumption motivation reemerges as the organism’smetabolism gradually uses up what was consumed. As real income increases, expenditures on thesesatiable items can sooner or later be expanded to the average satiation level. Unless people expandtheir consumption beyond that level (‘consumption’ in the sense of purchasing items without‘consuming’ them in the literal sense anymore), the absolute per capita consumption of these inputsper unit of time should therefore be expected to face an upper bound. 27

Food seems to be an obvious case. Its various forms are therefore preferred candidates fordemonstrating statistically that there are income-inferior goods, cf. Lebergott (1993, Part II).However, even here no satiation level seems to have as yet been reached even in the richestcountries. Household expenditure surveys show that per capita consumption is continuing to growin absolute terms (as in many other income-inferior goods). In part this may be explained byqualitative change in the diet in the direction of more complex and more expensive ingredients withmore refined sensory quality. (On this see the discussion further below of the interactions impliedby hypothesis 3 between conditioning learning and growing knowledge.) But this is not the wholestory. The food industry is battling with satiation tendencies since decades and has invented waysof circumventing it so far. Products innovations were developed by which the sensory perception ofa rewarding consumption experience can be enjoyed without rapidly approaching physiological

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satiation. A prominent case are food stuffs made with artificial sweeteners which allow to increasetheir physical intake – and thus the expenditures – to a much higher level than the satiation level forsimilar products made with sugar (see Ruprecht 2005). A typical example is the introduction of DietCoke. A similar role is played by spices and, more recently, artificial aromas which can be used aslow-calory substitutes for traditional flavoring ingredients with higher caloric content.

The consequences of rising income for income spending on items other than those directlyeaten up are slightly more complicated. The underlying action motivation is related here to otherinnate reinforcers based on physiological needs though in a more complex way. Take keeping bodyheat as one example and arousal of the senses or the cognitive system as another one. The crux hereis that there are no consumption items that could be eaten up to reduce deprivation in these needs.The items one can think of as relevant here – like warm clothes or heating facilities in the one caseand, say, electronic entertainment facilities like a television set in the other case – are not consumedthemselves (except if term ‘consumption’ would be used in the different sense of an expenditure ina market transaction, as is often not made clear). Instead, these items are means or ‘tools’ that, inorder to reduce deprivation, require their services to be consumed, not the items themselves. Atelevision set, for example, would be fairly useless, if it could not be turned on to emit theentertaining services in the form of a flow of visual and acoustic stimuli.

The significant feature of such ‘indirect’ consumption is that not the ‘tools’ purchased, butthe services they provide contribute to removing or reducing deprivation and are thus the source ofutility. This means that the (temporary) satiation level that stifles the motivation to consume can bereached with respect to the services. In using them one may feel warm enough, may have had enoughsleep, or enough entertainment. In contrast, the number of ‘tools’ (clothes, heaters, television sets)one purchases are not subject to satiation. The motivation to utilize their services and the motivationto purchase them in the first place are distinct, though related, issues. The latter motivation dependson how the instrumental relationship between the ‘tools’ and their services is perceived and is notnecessarily affected by satiation with respect to the services. Other reasons that may influence themotivation to purchase ‘tools’ can emerge from cognitive reflections (e.g., concerning securing aredundant supply, multiple availability for different purposes or at different places etc.) andsubsequent conditioned reinforcement building up secondary reinforcing instances and, of course,their interaction as suggested by hypothesis 3.

The upshot of the hypothesis that the motivation to purchase ‘tools’ and the motivation touse their services are two different issues is that the motives governing the purchases can, with risingincome, induce multiple purchases. This means that at the level of cognitive reflection and learning,including observational learning, plausible reasons may convince consumers to purchase such itemsseveral times over. These reasons may override the fact that the items provide one and the sameservice (or similar ones) and that, with respect to that service, the satiation level is close to beingreached or is already reached. For example, one pair of shoes (a ‘tool’ providing pain protection andbody warmth as ‘services’) would, in principle, be – and, in fact, for must of man’s cultural historyhas been – sufficient to provide decent services. With the introduction of functionally differentiatedshoes for representative purposes, for working, for casual home use, for athletic use, tennis, hiking,

27

and of course fashion-based status-signaling, sufficiently convincing reasons have been provided toextend the purchases of shoe ware. Since only one pair of shoes can be worn at the same time,purchasing several pairs of shoes means that on average the services of each single pair of shoes isused less intensely.

In general, if multiple purchases of the same ‘tool’ or similar ones exceed the numbertechnically necessary to furnish the satiation level in the services, this simply results in a decreasingaverage rate of using the services provided by each single ‘tool’. The interaction of conditioninglearning and cognitive learning often supports such a development (particularly when the level ofincome allows to collect rewarding experiences form conditioned reinforcers which are notthemselves subject to deprivation/satiation). Given the constraints on information processing andthe selective attention processes, the agents are likely to pay attention to, and start learning about,new action opportunities – often requiring substantial extensions of their consumption knowledge– if income increases make such new actions feasible for them. Once disposable income rises and,moreover, does so repeatedly, the very same information processing constraints are likely to inducea specialization in some new action opportunities. One agent may develop into a true deep-seasailing fan following up, with an increasing preference and growing expertise, the most recenttechnical achievements of the yacht industry. Another agent may develop into a similarly attentiveopera fan with highly differentiated perception of, and preferences for, the qualitative differences inthe music performance. In each case, the specialization goes hand in hand with the refinement effectimplied by hypothesis 3 and induces both cognitive reasons for additional spending on ever moredifferentiated product and motivational reasons in the form of additional rewards on learntreinforcers.

Another, but related, cause for expanding consumption irrespective of satiation levels beingreached can occur when a consumption good is capable of removing or reducing deprivation inseveral dimensions simultaneously. Such ‘combination goods’ are often deliberately created byproduct differentiation and product innovations. If, with rising income, consumption of these goodsis growing, satiation levels are usually not reached in all dimensions at the same time. In that case,a sufficient motivation to further expand consumption of the good or service may be upheld in thosedimensions not yet satiated. For obtaining additional satisfaction from such ‘combination goods’ insome dimensions, consumption in other dimensions is extended beyond the satiation level. Thepossibility to create new combinations is strongly supported by the refinement effect.

For the income spending categories discussed so far the question what the consequences ofrising income are has been discussed with reference to innate needs that are, in principle, satiable.In other spending categories, however, this condition may not hold, because the underlying needsmay not, or not easily, be satiable even with further increases in expenditures. Consider, e.g., theneed for social status recognition mentioned above. Consumption items with tool function whoseservices are able to signal the desired status by distinguishing oneself from others may remove orreduce deprivation in this dimension. Yet, with rising average income, lower income groups may beable to also acquire such consumption items. As a consequence, the status-distinguishing characterof the corresponding consumption items is lost and deprivation in this dimension returns. To

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continue to be able to signal the desired social status differences by one’s own consumption, other,and usually more expensive, goods need to be consumed. A level of satiation can, if at all, only beupheld by continuously rising the expenditures on status goods (cf. Hirsch 1978) an unstablecondition like in a weapon’s race.

A further case in which satiation is difficult to attain and consumption can therefore expandwithout reducing deprivation significantly is the primary reinforcing instance of sensory arousal. Asargued by Scitovsky (1976), the reason is again an instability in the deprivation-satiation mechanism,albeit one that is caused in a different way. This time it arises from a kind of sensory stupefactioneffect that calls for ever stronger stimuli to reduce deprivation. With growing consumption thesatiation level is continually rising here. The instability can be conjectured to be visible in modernconsumption patterns in the expenditures on entertainment, tourism, and the media that have beengrowing much faster with rising income than average consumption expenditures and are likely tocontinue to do so.

If the conjectures presented are correct, the dramatically growing consumption has severalindependent causes. The relative importance of these causes may vary over time and may be anadditional reason for the qualitative changes in the composition of consumption. In the longer run,the most important influence will, however, be exerted by the differential satiability of demand inthe various spending categories as it has been, and will continue to be, recognized by the differencesin income elasticities. The behavioral and cognitive regularities that have been argued to underliethese differences seem to be robust features of human behavior. What remains unpredictable is, ofcourse, the innovativeness of the industries in trying to avoid the effects of satiation on demand.

XI. Conclusions

In this paper, an attempt has been made to revoke the major changes of the utilitarian approach tohuman behavior that have been introduced during the neoclassical period in economics and to restatesensory utilitarianism from the point of view of today’s behavioral and human sciences. The aim ofthis endeavor is to obtain a richer empirical foundation for utility theory that is compatible with anaturalistic approach to human behavior. Such an approach should better be able to explain what itis that people wish to consume and therefore demand, and why; why variations in income affect thedemand for different goods and services quite differently, and what role consumption plays fordriving economic growth.

Following a brief review of the early utilitarian program based on hedonistic speculationsabout the motivation of human behavior, the major modifications of this program after Benthamhave been discussed together with the reasons for why they were introduced. The idealizationsimplied by these modifications made it possible to develop a beautiful rigorous theory of preferencesand demand. Yet, as discussed, the narrow empirical basis of this theory and to lack realism in itsassumption induced several attempts to revise the theory and also to partially revoke modificationsof Bentham original utilitarian program. Going yet a step further an attempt has been made in the

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paper to reappraise the utilitarian approach in the light of the modern naturalistic view on humanbehavior, i.e. to inject well established hypotheses from biological and psychological research intoutility theory in order to prepare the ground for a richer explanation of consumption.

On this basis, the causes of the unprecedented growth of consumption following the risingincome in the past century have been discusses. Several causes have been identified. Among themwere certain consumption motivations that are simply difficult to satiate (for different reasons).There are also cases where the supply side indeed has offered new or differentiated productsaccounting for consumer preferences where there had been no suitable offers before. However, thereis also evidence for expanding consumption as a result new wants (or preferences) being acquiredthrough contingent reinforcement where there had been no such wants (preferences) before.Furthermore, there is evidence for cognitively motivated consumption that is expanded despite thefact that the satiation levels in the corresponding dimensions are being reached and for consumerspending implying a latent ‘slack’ (consumption exceeding the satiation level in one or severaldimensions) as induced by “combination goods”. A special influence is exerted by the growingconsumption knowledge and the consumers’ specialization. In all these findings the empiricalfoundations of the theory of economic behavior turn out to imply specific explanations as to whatmotivations are involved in what kind of consumption, where particular consumption patterns comefrom, and how they change in the course of time.

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