Cardinal Utility

Back in the 19th century, a group of economists tried to turn economics into something like physics. Their idea? If we can measure things like heat or weight, why not measure happiness too? That’s how the concept of cardinal utility was born. It may sound strange now, but at the time, it was a bold step in shaping economic theory. The only catch? People aren’t thermometers.

What Is Cardinal Utility?

Cardinal utility is the idea that you can assign a numerical value to the satisfaction or pleasure you get from consuming goods and services.

It’s not just saying, “I like ice cream more than pizza.” It’s saying, “Ice cream gives me 10 units of happiness, and pizza only gives me 6.”

Yes - some early economists believed happiness could be counted, like marbles in a jar.

Example: If eating an apple gives me 8 “units” of satisfaction and a pear gives me 4, then according to cardinal utility, the apple brings me twice as much joy. This kind of thinking makes utility comparable and addable across different choices - as if taste could be listed on a nutrition label next to calories and protein. A sort of “happiness per serving.” Makes you wonder, doesn’t it?

The Theory’s Assumptions

Cardinal utility relies on three big assumptions:

• We can measure pleasure with numbers: People can assign precise values to their feelings. “This coffee? A solid 7.3 on my satisfaction scale.”
• We know exactly what we want: Everyone understands their own utility function perfectly. But let’s face it - humans are messy. We often don’t understand our own choices, especially when they go against our best interests.
• We can add up happiness: The total happiness of a group is just the sum of everyone’s individual utility. Smile enough, and society must be doing great, right? If that were true, salespeople would be the happiest people on Earth.

Real-world example: If Marco gets 15 units of joy from reading a book and Anna gets 10 from a cup of tea, the theory says we can add those up and say society got 25 units of wellbeing. Simple - but maybe too simple.

So... What’s the Problem?

Turns out, there are a few major flaws in this approach. Here are the big ones:

• We don’t actually know our “utility function”: No one can say with certainty how much joy something brings them - not even the economists writing the theories.
• Happiness is personal: What brings me joy might leave you bored. It’s like comparing a concert to a walk in the woods - there’s no shared scale.
• You can’t add what you can’t measure: Summing up subjective feelings doesn’t make much sense. It’s like adding kilograms to kilometers - no one would do that in physics, so why do it in economics?

In short, the joy I get from a cup of coffee isn’t directly comparable to yours - even if we both say we “love it.” Those feelings are internal, qualitative, and unique to each of us.

Enter: Ordinal Utility

Because of these issues, economists eventually shifted to a more realistic approach: ordinal utility.

Thanks to Vilfredo Pareto, the focus moved from measuring how much we enjoy something to simply ranking our preferences. You might not know exactly how much more you like coffee over tea, but you know which one you’d choose first. That’s all ordinal utility cares about.

Example: If I prefer a sandwich to soup, and soup to salad, I can rank them - but I can’t say by how much I prefer one over the other. Modern economics is built on this kind of reasoning, which gets visualized through indifference curves.

Why It Matters

Cardinal utility tried to turn human satisfaction into a number. But real-life decisions are more complex. We don’t measure pleasure with rulers.

The shift to ordinal utility wasn’t just a technical correction - it was a big shift in how economists think. It meant accepting that people aren’t just rational calculators. Our choices are shaped by feelings, habits, and context.

In the end, economics had to admit something simple but powerful: people aren’t spreadsheets on legs.