The theory of revealed preference, which lies at the core of the neoclassical economic method, asserts that people's preference orderings are revealed by their actions. This assertion has two possible meanings, of which one is a truism and the other false. When a person joins a riot against the government, he reveals through this action that he would rather riot than not. This is the sense in which the assertion is a truism. But if one means that the person must want a change of government, this is certainly false. His decision to riot could mean only that he considers it dangerous to stay on the sidelines.

A claim that certain purely private matters should be beyond the reach of society's laws, moral rules, and other customs is central to the distinctive liberalism of John Stuart Mill. On Liberty, perhaps the most eloquent defense of individual liberty ever written, laments the hostility allegedly displayed in modern mass societies toward “the right of each individual to act [in private matters] as seems good to his judgement and inclinations” (1859, p. 271n.). In Mill's view, a free society must design its institutions with due regard for what he terms “individuality.” That is, public authority, whether in the form of law, customary opinion, or economic power, must be self-limiting so that it does not interfere with the rights of individuals to choose as they like with respect to such private concerns as religious faith, reading materials, living companions, and consumption of drugs and alcohol. Individuals and voluntary groups should be permitted to do whatever they prefer within their private spheres even if everyone else in society dislikes what they do, is annoyed by them, and actually chooses not to be around them or to befriend them (1859, pp. 276–91).

Social scientists could learn some useful things from philosophy. Here I shall discuss what I take to be one such thing: a better understanding of the concept of utility. There are several reasons why a better understanding may be useful. First, this concept is commonly found in the writings of social scientists, especially economists (see, for example, Sen and Williams, 1982). Second, utility is the main ingredient in utilitarianism, a perspective on morality that, traditionally, has been very influential among social scientists. Third, and most important, with a better understanding of utility comes, as I shall try to show here, a better understanding of “personal welfare”. or, in other words, of what may be said to be in people's best interests. Such an understanding is useful to social scientists and philosophers alike, whether for utilitarian purposes or not.

On the face of it, the protracted public controversy over abortion in the United States and elsewhere might seem to rest on intractable normative questions inaccessible to economic analysis. But an influential early essay in the now sizable philosophical literature on the subject suggests otherwise. Judith Jarvis Thomson (1971) disarmingly inclined toward the view that “the fetus has already become a human person well before birth”,. presumably with all the rights pertaining thereto. She denied, however, that such rights necessarily include use of the mother's womb until birth. To illustrate her point, she compared the mother's situation to that, for example, of an unwilling Good Samaritan with a uniquely suited blood type, who is forced to share a kidney for 9 months with a famous, ailing violinist who needed its use for that duration to recover. Even if the life of a human being was at stake, the assertion of rights for the violinist or the fetus, she argued, would be too degrading for either the Good Samaritan's or the mother's status as a person, where large unwanted sacrifices would be required. Reduced to its economic essentials, the argument is that the mother has property rights to her own body, including the right to expel a “trespasser”. who would die as a consequence. Thus, the antiabortion position is neatly undercut by granting its major premise (the humanity of the fetus) while denying its conclusion.

In a recent examination of the origins of ordinal utility theory in neoclassical economics, Robert D. Cooter and Peter Rappoport argue that the ordinalist revolution of the 1930s, after which most economists abandoned interpersonal utility comparisons as normative and unscientific, constituted neither unambiguous progress in economic science nor the abandonment of normative theorizing, as many economists and historians of economic thought have generally believed (Cooter and Rappoport, 1984). Rather, the widespread acceptance of ordinalism, with its focus on Pareto optimality, simply represented the emergence of a new neoclassical research agenda that, on the one hand, defined economics differently than had the material welfare theorists of the cardinal utility school and, on the other, adopted a positivist methodology in contrast to the less restrictive empiricism of the cardinalists.

In a recent article, Edward Saraydar (1989) takes economists and economic historians to task for equating productivity and efficiency in comparative economic analysis. Although I found his thesis interesting, I was a bit surprised to see selected remarks from my article on firm size in nineteenth-century France (Nye,1987) used to frame his criticism of productivity comparisons as a means of making prescriptive statements. The passages selected may mislead the reader as to the nature of my arguments. Let me quote Saraydar on this: … I argue that … the problem with equating productivity with efficiency is that from the neoclassical standpoint this strongly suggests a prescriptive view - a view that things should be or should have been different - and thereby frees the analyst from the need to justify the utility costs that might be or might have been required to make things different. Thus, in the French industrialization debate, for example, Nye points out that evidence that smaller family firms were less productive would support the conclusion “that nineteenth-century French firms were too small (for whatever reasons) and that consequently French industry suffered from inefficiency” (Nye, 1987, pp. 667–68). Suppose the evidence to which Nye refers to existed. [My emphasis] Distributive considerations aside, in neoclassical economics a more Pareto-efficient state by its very nature is to be preferred to a less efficient one. Therefore, the implication is that family firms should have been larger and more productive. However, suppose also that the plethora of small family firms in nineteenth-century France, in fact, constituted a longstanding, widely accepted, socially imbedded institution. Clearly, the traditionalist thought-experiment and conclusion would ignore the potential costs in utility or satisfaction to owners of factors of production, a utility loss that may well have been required to make the “more efficient.” transformation to a relatively few large-scale industrial firms. That potential utility loss cannot be ignored and should be part of the analysis. (Saraydar, 1989, p. 56)

John Nye (1990) feels that one of my two brief specific references to his (1987) work “leaves the impression that my work downplays the problems of individual differences in taste or social institutions by dismissing them out of hand” (Nye, 1990, p. 148). Let me assure him that he is unduly alarmed, since virtually all readers will read into the passage that he quotes only what I intended and, indeed, what Nye himself intended - that if he or anyone else had found evidence that firm size mattered for productivity, this would be taken as evidence of inefficiency. This is especially clear because in the previous paragraph I (selectively, I suppose) took note of Nye's own review of the extensive literature that argues that “less productive and, therefore, ‘inefficient’ family firms led to French ‘backwardness’ in production” (Saraydar, 1989, p. 55).