Theory of Economic Growth

By Michio Morishima | Go to book overview

XII Dynamic Utility Functions Proposed

1. We have so far confined ourselves to the case where the Worker, the sole consumer in the economy, maximizes his 'instantaneous utility function' in each period subject to the condition that all his income is spent, without any time-lag, on current consumption of goods. He is a momentalist and does not see his demands for goods in various periods in their proper perspective. He has no dynamic utility function setting goods at different points of time against one another. The budget equation is satisfied period-wise with savings identically zero.

It is evident that if he were paid as well as ordinary workers in civilized countries are, he would more or less be able to abstain from current consumption of goods for their future use. He could calculate enjoyments and sacrifices at different times and find a consumption plan that gives the maximum satisfaction over time. The optimum schedule has to be balanced in the sense that the present (or capitalized) value of the stream of the Worker's expected incomes equals the present value of the stream of his expected expenditures; 1 but he is no longer required to arrange for income and consumption to be equal in each period. He would take full advantage of being allowed to making transient borrowing and lending. In fact, if preferable, he would lend some of his income to someone (say an entrepreneur) in some period on the understanding that it is returned in a later period.

Evidently, the possibility of saving and dissaving provides the consumer with a wider range of options; the best choice from this range will be an improvement on his previous choice when he is forced to live on his current income in each period. Although the DOSSO path may be recommended to the dictator or the Chairman of the economy as he is only interested in the scale of production in the 'final' period, it would not give an optimum path. The DOSSO programme is not designed to maximize the utilities of the citizens during the course en route to the final state; the unhappiest woman (I dare to use the superlative) would be the wife of a man who stakes his whole life on happiness and glory in his last moments.

2. In order to find an optimum growth programme we thus require a dynamic utility function which can serve as a criterion for judging welfare

-213-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Theory of Economic Growth
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen
/ 314

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.