The empirical evidence against neoclassical utility theory: a review of the literature

Abstract

Current economics textbooks and neoclassical economists justify a theory of consumer behaviour based on utility maximisation on a priori grounds. This methodology follows Lionel Robbins' idea that economic theory is based on logical deduction from postulates which are "simple and indisputable facts of experience." Strong evidence has emerged from many different lines of research that these "simple and indisputable facts of experience" are contradicted by human behaviour. In this article, we summarise some of the main contradictions between predictions of utility theory and actual human behaviour. Efforts to resolve these contradictions continue to be made within orthodox frameworks, but it appears likely that a paradigm shift is required.

Do Employment Protection Reforms Affect Well-Being?

“…in terms of relative income, is a crucial determinant of well-being, which was shown in the empirical literature on well-being and in behavioral economics (e.g. Karacuka and Zaman, 2012;Clark, Diener, Georgellis, and Lucas, 2008;Luttmer, 2005;Falk and Knell, 2004). A milestone in the literature on well-being and relative positions was the seminal article of Easterlin (1974).…”

From apocalypticism to eschatology: a comparative analysis of western “Utilitarianism” and Islamic “Maṣlaḥah”

“…In the utilitarian framework, the absence of counter-force gives the way to psychological egoistic bent to exploit and maximize the utility (Karacuka & Zaman, 2012). Indifferent of its variants, egoism in general explicates the "self-interest" with the satisfaction of one's preferences and desires which is but an essential building block of the utilitarian model.…”

Vietnam Land Market: Definitions, Characteristics, and Effects

“…Self-interested economic agents are the foundation of Neoclassical economic theory. This theory aims to maximize utility or maximize profit (Mehmet & Asad, 2012). Therefore, the allocation of land and natural resources is also aimed at maximizing personal production benefits.…”