Utilitat

Utilitat is the term used in Catalan for utility or usefulness, reflecting the satisfaction, happiness, or value that individuals derive from goods, services, or outcomes. In economics and philosophy, utilitat denotes the basis for preferences and choice.

The concept has roots in utilitarian philosophy, notably Bentham and Mill, who argued that actions are judged by the overall happiness they produce. In economics, utilitat was formalized to explain how people rank options and make choices under constraints.

There are two main notions: cardinal utility, which assigns numerical values to levels of satisfaction, and ordinal utility, which only ranks alternatives. Most modern consumer theory relies on ordinal utility, where only the ranking matters.

A utility function, a mathematical representation of utilitat, maps consumption bundles to a real number representing satisfaction. Consumers are assumed to maximize utility subject to a budget constraint, leading to demand curves. Diminishing marginal utility means each additional unit provides smaller increases in satisfaction, contributing to downward-sloping demand.

Under risk, expected utility theory uses a utility function over wealth to explain choices under uncertainty, with risk aversion interpreted as concavity of the utility function.

Utility is not directly observable; revealed preference and axiomatic approaches attempt to infer utilitat from choices. Critiques include issues with cardinal comparisons, interpersonal welfare comparisons, and the assumption that preferences are stable. Alternative approaches include happiness or well-being metrics and non-utility-based explanations of choice.

Applications include welfare economics, cost-benefit analysis, and policy evaluation, where changes in utilitat are used to assess gains and losses to society.