What is Utilitarianism?
Utilitarianism is a normative theory of ethics that states that the ethical and moral justness of an action depends only on the consequences of that action. An action that increases everyone’s utility is morally and ethically just, whereas an action which decreases everyone’s utility is morally and ethically unjust. Utility is a term used by classical ethical theorists and philosophers to describe happiness and well-being.
Quantitative utilitarianism, or Benthamite utilitarianism, is a branch of utilitarianism that was developed out of the work of Jeremy Bentham (1747-1832) – an English philosopher, economist, political scientist, legal scholar, and social reformer. Quantitative utilitarianism is concerned with aggregate utility maximization (i.e., maximizing the overall happiness of everyone) and uses a hedonic calculus to determine the rightness or wrongness of actions.
Bentham’s fundamental axiom states that, “It is the greatest happiness of the greatest number that is the measure of right and wrong.” The concept of hedonic calculus (also known as felicific calculus) was developed by Bentham in his 1789 text, “Introduction to the Principles of Morals and Legislation.”
According to quantitative utilitarianism, every action results in some amount of “pleasure” and some amount of “pain” for an individual. Hedonic calculus aggregates the individual “pleasures” and “pains” on the basis of their intensity, duration, certainty, propinquity, fecundity, purity, and extent.
Qualitative utilitarianism is a branch of utilitarianism that arose from the work of John Stuart Mill (1806-1873) – an English philosopher, civil servant, and politician. Qualitative utilitarianism rejected hedonic calculus and categorized “pleasures” and “pains” in a more qualitative manner.
Mill argued that certain “pleasures” and “pains” were of greater consequence than others, even if there was no quantifiable proof of their increased importance. He argued that “higher pleasures” could only be recognized by those who have experienced them.
Criticisms of Utilitarianism
1. Human happiness is impossible to quantify
This is one of the primary criticisms of quantitative utilitarianism. Human perception of the same experience varies greatly among individuals. That fact does not allow for a consistent quantifying process. In addition, all ethical systems stemming from consequentialism (the belief that actions are judged on the basis of their consequences) are limited by the ability to guess at the future consequences of present actions.
2. Aggregate measures of happiness ignore distributional aspects
Consider three actions: X, Y, and Z. The effect of each of the actions on five individuals is given below:
Utilitarianism would prefer action Z over actions X and Y. In addition, actions X and Y would be considered equal because they yield the same level of aggregate happiness.
3. The motives behind actions are ignored
Consider two individuals, A and B, who donate $100 and $1,000, respectively, to a charity. Suppose individual A donated the money because he wanted to help the charity and individual B made the donation so that he could improve his own standing in society. Utilitarianism would consider individual B’s donation to be superior to individual A’s donation, despite the fact that it was made with an ulterior, and less noble, motive.
CFI offers the Financial Modeling & Valuation Analyst (FMVA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following CFI resources will be helpful: