Cardinal Utility

Chapter 6 reconstructs the progressive definition and stabilization of the current notion of cardinal utility as utility unique up to positive linear transformations. This notion was the eventual outcome of a long-lasting discussion, inaugurated by Vilfredo Pareto, regarding an individual’s capacity to rank transitions among different combinations of goods. This discussion continued through the 1920s and early 1930s and underwent a decisive acceleration from 1934 to 1938, that is, during the conclusive phase of the ordinal revolution. In this latter period, the main protagonists of the debate were Oskar Lange, Henry Phelps Brown, Roy Allen, Franz Alt, and Paul Samuelson. In the discussions that led to the definition of cardinal utility, some of these utility theorists began to envisage a broader notion of measurement according to which utility can be measurable even if no utility unit is available. Until the mid-1940s, however, cardinal utility remained peripheral in utility analysis.