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This is by no means a "formal" matter. Clearly, the intuition behind the continuity requirement is a small step in the direction of utilitarian ethic… - Kenneth Arrow
" "This is by no means a "formal" matter. Clearly, the intuition behind the continuity requirement is a small step in the direction of utilitarian ethics; even the worst-off member of the society might be made to suffer if there is enough benefit to others. The assumption of diminishing marginal utility implies with regard to usual policy alternatives that there are better ways of improving the lot of better-off members than by hurting the worst-off.
But there is one striking case, of great practical importance, where our intuition is in favor of utilitarianism is some form as against any minimax rule. I refer to allocation over time. Typically, we expect future generations to be better off than we are. Should we save for them either directly or in the form of public investments? A maximin rule would surely say no. But if investment is productive, so that, in terms of goods, the next generation gains more than we lose, we usually feel that some investment is worthwhile even though the recipients will be better off than we are.
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About Kenneth Arrow
Kenneth Joseph Arrow (August 23, 1921 – February 21, 2017) was an American economist, who was Professor Emeritus of Economics in Stanford, and joint winner of the Nobel Memorial Prize in Economics with John Hicks in 1972.
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Kenneth Joseph Arrow
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Kenneth J. Arrow
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Ken Arrow
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Additional quotes by Kenneth Arrow
According to this point of view, knowledge is, so to speak, a by-product of production or of investment. In research, on the contrary, it can be said that knowledge is the primary product. The distinction between products and by-products is not important for ordinary goods, because in a competitive regime the marginal costs of the two must be equal. But since knowledge does not have the normal properties of an economic good, it is necessary to study each mode of its production.
Information, one of the fundamental determinants of production, laps over from one firm to another, yet the firm has so far seemed reasonably sharply defined in terms of legal ownership. It seems to me there must be increasing tensions between legal relations and fundamental economic determinants. Small symptoms are already appearing in the legal and economic spheres. There is continual difficulty in defining intellectual property. The United States courts, at least, have come up with some strange definitions of property.
Because the costs of transmission are nonnegligible, even situations which are basically certain become uncertain for the individual; the typical economic agent simply cannot acquire in a meaningful sense the knowledge of all possible prices, even where they are each somewhere available. Markets are thus costly to use, and therefore the multiplication of markets, as for contingent claims as suggested above, becomes inhibited.
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