Good job regurgitating micro econ 101. /sarcasm off/ In all seriousness trying to discuss utility of a general group of people (or even a specific person) is doomed to failure. Utility is a nice round theoretical construct for trying to talk about why consumers make the decisions they do.
However, there is a lot of evidence to show consumers do not make entirely rational choices. Even if they did, trying to determine a utility function for a consumer would still fail. For instance, can you even with certainty determine your own utility function. I know I can't.
Now lets pretend a consumer does in fact only make rational choices, and their utility function for every conceivable situation is known. I have distinct, although unproven, suspicion that determining what choices the person would make through their day would be NP-complete as their present choices would effect their future choices. Thus all possible outcomes would have to be considered far into the future if one truly wanted to maximize utility.
Therefore, assuming what I have just said is fairly logical, it is impossible for a rational consumer to exist even if their utility function is known, since it would be impossible to for them to compute any given choice in a finite amount of time.
In conclusion any discussion that touches on "utility" or assuming a group of people is making "rational" choices is doomed to failure. The truth is we don't know why any given person make any given choice.
Also you seem to ignore the important of positive externalities in your arguments. I believe this is where you disagree with other posters.
there is a lot of evidence to show consumers do not make entirely rational choices. Even if they did, trying to determine a utility function for a consumer would still fail. For instance, can you even with certainty determine your own utility function.
Of course; I never claimed otherwise. It's certainly true that any person's utility function is at least partly unknown to them, and in any case changes over time. As a result it has little value as a predictive tool. But that doesn't mean that it doesn't exist. Ludwig von Mises attacks this head-on in Human Action (http://en.wikipedia.org/wiki/Human_Action ).
It's undeniable that at any juncture, the action that a person takes is based on some judgment, conscious or not (and quite possibly mistaken), that the chosen action delivers a greater utility than its alternatives.
Thus, the hypothetical postdoc-cum-bartender is deciding -- for reasons that we don't know, but real all the same -- that he would prefer to do his research over bartending, even to the extent of giving up $60K to do so.
Who are we to second guess his decision? Precisely because, and not in spite of, the fact that his reasons are inscrutable, we can only assume that he's making the best call he can. By what right can we override it? And more to the point, if his/her university is providing such a valuable career for him, who are we to say that they must sweeten the pot and throw in even more money?
However, there is a lot of evidence to show consumers do not make entirely rational choices. Even if they did, trying to determine a utility function for a consumer would still fail. For instance, can you even with certainty determine your own utility function. I know I can't.
Now lets pretend a consumer does in fact only make rational choices, and their utility function for every conceivable situation is known. I have distinct, although unproven, suspicion that determining what choices the person would make through their day would be NP-complete as their present choices would effect their future choices. Thus all possible outcomes would have to be considered far into the future if one truly wanted to maximize utility.
Therefore, assuming what I have just said is fairly logical, it is impossible for a rational consumer to exist even if their utility function is known, since it would be impossible to for them to compute any given choice in a finite amount of time.
In conclusion any discussion that touches on "utility" or assuming a group of people is making "rational" choices is doomed to failure. The truth is we don't know why any given person make any given choice.
Also you seem to ignore the important of positive externalities in your arguments. I believe this is where you disagree with other posters.