Doug H wrote > >"revealed preferences" > Who came up with that concept?
Paul Samuelson. Background (from long-ago graduate school days). About 75% of the following is true. In the old days of neoclassical economics they made use of the notion of "utility." Utility was generally seen to measureable. If A gave person X 10 utils and B gave the same person 12 utils, then B would be chosen and X would be better off with B. How much better? 2 utils. Paul S. presented an approach that made unnecessay both the notion of utility and the need to actually be able to say that some primal utility was measureable in any way. He argued quite simply that if person X chose B over A than this indicated the "revealed preferences" of person X. No reference had to be made to any metaphysical notion of utility. Revealed preferences dealt just with observations so it just seemed much more scientific. This permitted neoclassical economics to build a welfare economics that gave the same answer as before (free markets are good) without using the notion of utility. This notion of revealed preference also permitted economists to naturally shift from the use of calculus to the use of set theory. Set theory is cool and, so, this was seen as a good consequence. The ideal of revealed preference seems pretty obvious in retrospect, but no one thought if it before P.S. and it had a big impact on neoclassical welfare economics. Eric
