Cardinal Utility
Cardinal utility refers to the idea that utility can be quantified and meaningfully added across individuals. This concept is rooted in the principle of maximum felicitas introduced by Bentham, who argued that the satisfaction an individual derives from consuming a good or service can be treated as a measurable and aggregable quantity. From this standpoint, individual utilities can be summed to obtain the total utility of society. Cardinal utility is a 19th-century construct, born from economists’ attempts to frame economics as a precise science, on par with the natural sciences.
Example. Imagine someone assigns 100 units of utility to eating a pizza and 50 units to eating a sandwich. According to the logic of cardinal utility, this implies that the pizza delivers exactly twice as much satisfaction as the sandwich. If the person eats two pizzas, they would receive 200 units of utility - the values simply add up. Within this framework, choices can be assessed and compared using absolute numerical measures.
As we’ll see, this interpretation of utility raises several concerns - chief among them, the challenge of assigning an objective, quantifiable value to something as inherently subjective as individual satisfaction.
Criticisms of Cardinal Utility
The cardinal approach assumes that individuals are capable of assigning exact numerical values to every consumption choice - for each good and for every possible quantity. This would require consumers to have full, rational knowledge of their own utility function - an assumption that is clearly unrealistic. And even if such precise measurement were possible (which it isn’t), utility remains inherently subjective: each person relies on their own unique utility function. To aggregate individual utilities, we’d need perfect information about everyone’s preferences, which is simply unattainable. In short, utility cannot be treated as an absolute, objective magnitude - as the cardinal framework implies - because it is fundamentally relative and personal. In light of these limitations, neoclassical economists ultimately moved away from the cardinal view and embraced the concept of ordinal utility instead. According to Pareto, there is no universal unit for measuring utility. Each individual has their own preferences and tastes (subjective utility), which makes any attempt at objective, interpersonal comparison of utility meaningless. All we can say is that, from an individual's perspective, one good may be preferred to another, or viewed as equally or less desirable. Pareto’s rejection of utility comparability laid the groundwork for the theory of ordinal utility and the use of indifference curves in modern consumer theory.
