I’ve always heard utility in the context of a utility function. Basically:
f(u) = Wx*x + … + Wz*z, where x and z are variables that are impacted by decisions and constraints. Each variable is weighted for importance by the person / group using the utility function.
So for a home buyer needing to get to a city, the utility of the house improves as the location to the city gets better, subject to the constraint that it’s not in the river. A home buyer utility function might also weight cost, neighbors, amenities, square footage, local pollution, safety, and any other meaningful variable for the buyer.
Turning this into a quantitative formula can be cramming it in and quite hand-wavy, but ultimately it’s up to the person optimizing for their own utility to put in the variables and weights. These will be shifted by the person’s moral code (e.g. A Jewish person may highly value living in the city’s Eruv).
On a political note, big government supporters believe the federal government can define a utility function for the country that is best for the greater good. People who believe in smaller federal government and governing at the local level believe the utility functions should be defined at the individual level if possible - subject to the constraints one does not infringe on others’ rights. There are benefits to both sides (some things we can’t achieve if everyone acts independently, some things create externalities, some things have too many edge cases and unintended consequences).
I think the extreme of a shared utility function is communism, with an idea of central planning.
If the math of utility is interesting to you, check out Hal Varian's microeconomics book (he is/was chief economist at Google) or the intro grad text for microeconometrics Mas-Collel, Winston, and Green.
Utility theory's primitives are defined before the actual function.
Social choice theory is covered in MWG -- arrow's impossibility theorem is absolutely fascinating!
The field of mechanism design relies heavily on utility theory -- it's effectively the inverse of game theory, or, how to structure systems and incentives to get desired outcomes.
f(u) = Wx*x + … + Wz*z, where x and z are variables that are impacted by decisions and constraints. Each variable is weighted for importance by the person / group using the utility function.
So for a home buyer needing to get to a city, the utility of the house improves as the location to the city gets better, subject to the constraint that it’s not in the river. A home buyer utility function might also weight cost, neighbors, amenities, square footage, local pollution, safety, and any other meaningful variable for the buyer.
Turning this into a quantitative formula can be cramming it in and quite hand-wavy, but ultimately it’s up to the person optimizing for their own utility to put in the variables and weights. These will be shifted by the person’s moral code (e.g. A Jewish person may highly value living in the city’s Eruv).
On a political note, big government supporters believe the federal government can define a utility function for the country that is best for the greater good. People who believe in smaller federal government and governing at the local level believe the utility functions should be defined at the individual level if possible - subject to the constraints one does not infringe on others’ rights. There are benefits to both sides (some things we can’t achieve if everyone acts independently, some things create externalities, some things have too many edge cases and unintended consequences).
I think the extreme of a shared utility function is communism, with an idea of central planning.