Why I Am Not an Austrian Economist
I&#x27;m not convinced by the way the author argues. For example, he gives <i>U=a</i>ln(quantity of apples)+(1-a)<i>ln(quantity of oranges)</i> as an example of a utility function and in the very same section claims that neoclassical economists only use ordinal scales, hence the criticism of presuming cardinal utility doesn&#x27;t apply.<p>But does it really make sense to use a nonlinear function to represent ordinal preferences?<p>As a philosopher working in the so-called theory of value structure - basically, about the meaning of &#x27;better than&#x27; -  my criticism of preference modelling would be different and applies to both camps. First, if the modelling is descriptive we know that people have e.g. non-transitive preferences and completeness also doesn&#x27;t hold. Second, there are also pretty good arguments against the transitivity of &#x27;better than&#x27; from a normative perspective that at least need to be defused somehow. IMHO, the right solution points towards conditional preferences and&#x2F;or lexicographic decision procedures. In a nutshell, multiple criteria interact in complicated ways and the assumption that the outcome of aggregating them is a neat complete preorder is generally not warranted. (And there is plenty of work on nontraditional decision theory by e.g. Fishburn to support alternatives.) Third, there are good arguments why some of our evaluative comparisons between items are cardinal, at least on an interval scale, whereas others are purely ordinal. I understand why this would be an undesirable point of view for an economist, though, since there is no known rationally and normatively justifiable way of aggregating ordinal and cardinal utilities into a meaningful overall assessment. From a measurement-theoretic perspective, an overall ordinal utility is the best you can get in this case. There seems to be a certain tendency of economists to dismiss certain plausible views because they are technically undesirable rather than on the basis of substantive arguments.<p>Another thing is that as far as I can see, economists who presume ordinal utilities do not seem to care enough about Arrow&#x27;s Theorem in contexts with multiple attributes. At least they should make clear that IIA ought not hold when ordinal preferences are aggregated.