The Problem of Indifference and Choice. Answer to Nozick´s Challenge to Austrians

Matúš Pošvanc

doi:10.62374/yqb37464

Authors

Matúš Pošvanc F.A. Hayek Foundation Bratislava

DOI:

https://doi.org/10.62374/yqb37464

Keywords:

need-good, portfolio, temporal circumstances, homogenous good, combination of needs

Abstract

The aim of this paper is to link the Austrian School´s approach to indifference with the mainstream approach. The paper looks critically at an interesting ongoing discussion about the problem of indifference and choice within the Austrian School. The discussion was conducted in response to Nozick (1977) address to representatives of the Austrian school on the problem of indifference, implying the invalidity of the law of diminishing marginal utility in the absence of a presupposition of indifference. This paper briefly introduces the discussion and its main problems. Stated reservations will be replaced by suggested solutions based on the minor modification of the theory of subjective value and on the premise that needs are satisfied by a portfolio of goods over time. The discussion will allow the preservation of elements of Indifference analysis as interpreted by the neoclassical mainstream. However, it will also allow interpretation of the problem of choice based on strict preferences and creates room for Indifference, also from the point of view of the Austrian School of Economics. This is quite a controversial conclusion, but it is a logical consequence of the proposed minor modification in the theory of subjective value.

References

Aguirre Sotelo, J. A. M., & Block, W. E. (2014). "Indifference Curve Analysis: The Correct and the Incorrect." Oeconomia Copernicana, 5(4), 7-43. https://doi.org/10.12775/OeC.2014.025

Biľo, Š. (2004, July 21). "The Theory of Imputation: A context of value spreads between means and ends." Retrieved from http://www2.gcc.edu/dept/econ/ASSC/Papers2004/Imputation_Bilo.pdf

Block, W. E. (1980). "On Robert Nozick's 'On Austrian Methodology'." Inquiry, 23(4), 397-444. https://doi.org/10.1080/00201748008601918

Block, W. E. (2009). "Rejoinder to Hoppe on Indifference." Quarterly Journal of Austrian Economics, 12(1), 52-59. Retrieved from https://mises.org/library/rejoinder-hoppe-indifference

Block, W. E., & Barnett II, W. (2010). "Rejoinder to Hoppe on Indifference, Once Again." Reason Papers, 32, 141-154. Retrieved from https://philpapers.org/rec/BLORTH-5

Block, W. E. (2012). "Response to Ben O'Neill on indifference." Dialogue; Issue No. 2, 76-93. Retrieved from https://dlib.uni-svishtov.bg/handle/10610/2380

Engliš, K. (1930). "Teleologie jako forma vědeckého poznání." [Teleology as a form of scientific knowledge.] Praha: F. Topič.

Hayek, F. A. (1952, 2010). Sensory Order. Kessinger Publishing, LLC.

Hoppe, H.-H. (2005). "Must Austrians Embrace Indifference?" Quarterly Journal of Austrian Economics, 8(4), 87-91. https://doi.org/10.1007/s12113-005-1005-6

Hoppe, H.-H. (2009). "Further Notes on Preference and Indifference: Rejoinder to Block." Quarterly Journal of Austrian Economics, 12(1), 60-64. Retrieved from https://mises.org/library/further-notes-preference-and-indifference-rejoinder-block

Hülsmann, J. G. (2003). "Facts and Counterfactuals in Economic Law." Journal of Libertarian Studies, 17(1), 57-102. Retrieved from https://mises.org/library/facts-and-counterfactuals-economic-law-1

Chroustal, F. (2019, November 14). Personal interview. Vienna.

Lachmann, L. M. (Ed.), Lavoi, D. (2005). Expectations and the Meaning of Institutions: Essays in Economics. First published 1994 by Routledge. Taylor & Francis e-Library, 2005. Retrieved from https://www.mises.at/static/literatur/Buch/lachmann-expectations-and-the-meaning-of-institutions.pdf

Lawson, T. (2012). "Ontology and the Study of Social Reality: emergence, organisation, community, power, social relations, corporations, artefacts and money." In Lawson, T. (2019), The Nature of Social Reality: Issues in Social Ontology (Economics as Social Theory). Routledge. New York, USA. https://doi.org/10.4324/9780429199035-2

Mises, L. (1998). [1949] Human Action. Scholar edition. Auburn, Ala.: Ludwig Von Mises Institute. Retrieved from https://mises.org/library/human-action-0/html/pp/663

Nozick, R. (1977). "On Austrian Methodology." Synthese, 36(3), 353-392. https://doi.org/10.1007/BF00486025

Pavlík, J. (2004). F.A. Hayek a teorie spontánniho řádu. [F.A. Hayek and the theory of spontaneous order.] Profesional Publishing. Praha.

Pavlík, J. (2006). "Austrian Economics and the Problems of Apriorism." E-Logos - Electronic Journal for Philosophy, 13, 1-73. ISSN 1211-0442. Retrieved from http://nb.vse.cz/kfil/elogos/science/pavl106.pdf

Pošvanc, M. (2019). "Evolutionary possibilities of the emergence of economic calculation." Working paper. Retrieved from https://www.researchgate.net/publication/340183556_Evolutionary_possibilities_of_the_emergence_of_economic_calculation

Pošvanc, M. (2019b). "Why I am not Mises' Adherent." Working paper. Retrieved from https://www.researchgate.net/publication/333774098_Why_I_am_not_Mises'_Adherent

Pošvanc, M. (2020a). "A Brief Explanation of the Price of Money" (March 27, 2020). https://doi.org/10.2139/ssrn.3562493

Pošvanc, M. (2020b). "Why Are We Economically Successful? The Theory of Economic Error and Learning." Working paper. https://doi.org/10.1007/978-3-030-71800-8_2

Rothbard, M. (2004). (1962, 1970). Man, Economy, and State. Auburn, Ala.: Mises Institute. Retrieved from https://mises.org/library/man-economy-and-state-power-and-market

Rothbard, M. (1997, 1956). "Toward a Reconstruction of Utility and Welfare Economics." In The Logic of Action One, UK: Edward Elgar Publishing Limited, pp. 211-254. Retrieved from https://mises.org/library/toward-reconstruction-utility-and-welfare-economics-1

Shackle, G. L. S. (1992). Epistemics and Economics: A Critique of Economic Doctrines. Routledge. New Jersey, USA.

Stroukal, D. (2014). "Inkorporace metodologického singularismu do metodologie ekonomie." [Incorporation of Methodological singularism into the Methodology of Economy]. E-Logos - Electronic Journal for Philosophy, 21(1), 1-15. https://doi.org/10.18267/j.e-logos.360

Wysocki, I. (2016). "Indifference-in Defense of Orthodoxy." Societas et Ius, 5, 15-30. https://doi.org/10.12775/SEI.2016.002

Wysocki, I. (2017). "A Note on Block-Hoppe Debate on Indifference." Quarterly Journal of Austrian Economics, 20(4), 360-365. Retrieved from https://mises.org/library/note-block-hoppe-debate-indifference

Wysocki, I., & Block, W. (2018a). "An analysis of the supply curve: does it depict homogeneity among its constituent elements? Another rejoinder to Nozick." MEST Journal, 6, 132-143. https://doi.org/10.12709/mest.06.06.01.14

Wysocki, I., & Block, W. (2018b). "Homogeneity, Heterogeneity, the Supply Curve, and Consumer Theory." Quarterly Journal of Austrian Economics, 21(4), 398-416.

https://doi.org/10.35297/qja.010004