Answer to Question #114205 in Microeconomics for umema

Question

Why the concept of additivity of utility get cancelled? Which concept replaced it, why that
considers superior?

Answer 1

Utility additivity is an economic concept based on modeling the utility of absolutely unrelated goods, which in the modern world does not have wide practical application. Two main problems requiring a review of the methodological basis of utility theory: the first problem is related to the presence of empirical anomalies that are not taken into account by theoretical constructions; the second problem proceeds from the isolation of the theoretical apparatus from the contemporary problems of environmental management.

The idea of ​​a generalized utility function was introduced by Edgeworth in The Mathematical Psyche (1881) and developed by Fisher in his famous doctoral dissertation, Mathematical Research (1892). And although most economists recognized the interdependence of the utility of different goods and, therefore, the impossibility of the existence of an additive utility function, it was abandoned slowly and with great resistance.

I believe that the transition from the additive utility function has been made right, since when considering utility from the point of view of additivity there will be no “lower” and complementary goods, which contradicts the real situation on the goods market.