Utility and Purposeful Behavior

UTILITY AND PURPOSEFUL BEHAVIOR THURSDAY, MARCH 31, 2011 Utility refers to pleasure, happiness, or satisfaction in engaging in an activity, i.e., eating a meal or attending a ballgame. This is important because people generally use their scarce time, energy and money to gain the most utility possible. Assuming people behave rationally, they can maximize utility by the choices they make. If they choose wealth accumulation, they can invest their income. If they like to help others, they can give to charity. Utility can also depend upon how a person spends their time. Someone who invests in an education may get satisfaction from studying for exams. With the choice of studying for exams, the student sometimes may need to balance their time to study for exams over spending time with friends and family and other leisurely activities. If someone wants to invest in a healthy lifestyle may enjoy living a balanced life of healthy meals and moderate exercise. Purposeful behavior can be economic or noneconomic, instrumental or noninstrumental, or egoistic or altruistic, or public or social. This gives the assumption that goals and actions, means and choices are either rational or irrational. In economics, this can reflect human behavior as rational self-interest. When they look for opportunities of self-interest, they decide what goods and services to buy. This behavior does not assume that people and businesses are immune from faulty logic. It does mean that people and companies do make decisions with some kind of interest in mind. This rational self-interest does not mean that people and businesses are selfish. In order to earn profit one must satisfy someone else’s wants and desires. This means that everyone makes sacrifices for others. Therefore, self-interested behavior increases personal satisfaction. In any event, people may need to examine their preferences for each and every activity they decide to engage in. Scarcity of time, energy and money affect the decision of so many people. RESOURCES www.economic-theory.com/.../what-is-meant-by-the-term-utility-and-how-does-it-relate-to-purposeful-behavior.html Human Rational Behavior and Economic Rationality www.sociology.org/content/vol7.2/02_zafirovski.html ANSWERS TO END-OF-CHAPTER AND APPENDIX QUESTIONS www.colorado.edu/Economics/courses/.../2010Chpt1_answers.pdf