Tuesday, July 14, 2009

I met a guy named Stan

I was walking home with some edibles when a man walked up to me with the refrain "hey man I am just tryin to scrounge up a buck. I just want a buck for a budweiser I been walkin around so long my feet hurt just." The guy seemed earnest enough and I gave him $2. I didn't really care what it was he wanted the money for. All that really mattered was that very clearly one dollar would make a significant difference to this person whereas to me (at least at the moment though hopefully it will stay this way) $1 doesn't really make much of a difference. After I had given him the money he introduced himself as Stan and he told me that next time we met hopefully he could pay me back.

At any rate this started me thinking about utility. Now utilitarianism is the idea that one should strive for the greatest good for the greatest number. But perhaps what one should really be trying to do is maximize the total utility of a group of people. If you have 2 people with no money and no place to live and you give one of them $10,000 and 2 houses to live in the overall utility goes up. But if instead you give both of them $5,000 and each one house to live in the gain in utility will be greater. This is because for the very poor the utility of having a single dollar is very high whereas the utility of a single dollar to the average American is very low.

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