Paper Title: Utility Maximization, Morality, and Religion

Author:        Jonathan E. Leightner

Publisher:    Journal of Economic Issues, 39(2), 375 – 381.

Jonathan E. Leightner’s paper, “Utility Maximization, Morality, and Religion”, provides a detailed, academic critique of the utility maximization theory as the foundation of neoclassical economics by highlighting its fundamental conflict with the core tenets of moral philosophy and religion. The central argument is that the neoclassical model, despite its purported universal explanatory power, is amoral because it accepts all goals without judgment, thus failing to provide a basis for ethical choices.

The utility maximization theory assumes that all choices are made solely to maximize the chooser’s own utility, happiness, or pleasure, which is achieved by realizing their personal goals. Because the theory accepts the entire ‘gamut’ of goals—from ‘complete self-indulgence to saving others’—it claims to explain all human behaviour. To maintain this universal applicability, neoclassical economists intentionally refuse to judge between different sets of goals.

Leightner argues that this self-centred approach places the chooser’s utility as primary; an individual will only take actions that increase the utility of others if, and only if, that action simultaneously increases their own utility. The author notes that it is theoretically impossible for everyone to have a utility function where everyone else’s utility is weighted equally to their own, as this would be “infinitely recursive”.

The paper contrasts this self-centred economic model with moral philosophy. Egalitarian ethical theories which include Utilitarianism, Rawls’s theory of justice, Situation Ethics (Joseph Fletcher), and Kantian ethics (Categorical Imperative), all require that, as a necessary condition for morality, one must treat the welfare of others the same as or equally to one’s own welfare.

Kantian Ethics is highlighted as logically inconsistent with utility maximization. The Categorical imperative requires treating people ‘only as ends, and never as means’. Utility theory, however, implies that any benevolent act, such as giving money to a homeless person, is merely a means to increase the giver’s own utility.

Kant’s categorical imperative states that one should follow the rules that could be willed as universal laws and respect other’s dignity as an end, rather than merely as a means to an end. In contrast, in the neoclassical economics, Warm-glow explains consistent philanthropy in spite of government’s social spending, but it does not provide explanation for pure altruism and violates Kant’s categorical imperative.

The author pre-emptively addresses the defence that Pareto optimality—the notion of taking actions that increase someone’s utility without decreasing another’s—is economics’ answer to morality.

Leightner dismisses this as inadequate, arguing that a normative economic framework based only on Pareto criteria would be morally silent on inherently repugnant issues such as slavery, child prostitution, and child abuse, because correcting these situations would necessarily reduce the perpetrator’s utility. Furthermore, Pareto optimality cannot judge between different income distributions, a fundamental flaw for an ethical framework.

Author writes that when we call utility maximization ‘normal’ and ‘rational’, our students hear an endorsement of utility maximization (our culture associates ‘normal’ and ‘rational’ with ‘good’). By implying that utility maximization is good, our students hear a moral obligation. Then when we refuse to judge between possible goals, our students hear the implied message that any goal is ‘OK’. Goals to help others are not better or worse than goals that involve complete self-indulgence.

Author gives an example that if I do not add a moral code to utility maximization, then I cannot punish the criminal. Punishing a criminal reduces his utility and, thus, is a movement away from a potentially Pareto optimal solution. If morality is not added to utility maximization, then there is no reason for anyone to feel guilty or to repent. If the only criterion is that I have to judge acts as whether or not they maximize utility, then all acts that I actually choose were the ‘best’ choices at the time.

Ultimately, the paper calls for economics instructors to add a short qualification when teaching utility maximization. This qualification must explicitly state that the theory is self-centred and ‘blindly accepts without judging’ all goals, whereas morality, according to philosophers, requires judging goals as good or bad and placing others’ welfare on the same level as one’s own. Without a moral code, the author concludes, there is no basis for judging right and wrong, and figures like Mother Theresa and Hitler are rendered ‘indistinguishable’. The solution requires acknowledging the need for both economic efficiency and moral philosophy.

Author contends that people do think outside their utility functions when they rationally decide what goals to include in their utility functions, allowing them to change their goals over time. People possess the ability to empathize with others. Therefore, the author envisions that we need both economists and moral philosophers to create a just and efficient world. We also need to tell our students that they need to carefully choose what goals to include in their utility functions so that they can be moral and productive citizens.