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Ordinalist and cardinalist approach

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    Humans can satisfy their needs by different combinations of consumer goods and services. A consumer must decide which combination is most convenient to satisfy their needs – this is called consuming strategies. Decisions are influenced by different factors as a price, income, preferences and utility of goods. Then it comes to a decision : What is most useful or utility for a consumer? Here are two different approaches to the behavior of the consumer. First one is a cardinalist approach to consumer behavior. According to a cardinalist version of theory of utility, consumer is able to measure utility as well as compare a size of utility of different goods. If we were to acquire more and more units of a good, we would put them to less and less valuable uses. But let´s focus more on theory that is in contrast with cardinalist approach – to the theory of choice. According to the ordinalist hypothesis a consumer can not measure utility but is able to express what has higher value and utility for them. „Ordinalist approach has replaced the assumption that consumer utility is measurable with assumption that consumer preferences can be ranked in order of importance.“ (Griffiths, 2000). Let´s imagine a situation.

    For example we have three different goals that we put on a scale in this order :

    1. drinking a glass of apple juice;

    2. eating an apple;

    3. make a fruit apple salad. We ranked these goals ordinally. We assume that one complete apple is required to satisfy each of these goals. What will we do if we have just one apple? Probably we will use the apple for apple juice – this is our most highly-valued use. Well, what will happen if we have two apples? Cerainly, we will use the apples for our first two most highly valued uses, etc… On this instance we can point out at preferences of our needs. We do not measure utility, neither compare the size of utility. Simply we can express what has a higher value for us than the other form of product. We can say which option is more useful for us than the other one. To conclude, I think the main difference between the approaches is mainly in measurability, in different approach of utility. The British economist Lord Lionel Robbins compared utility to love. He said: „You can usually tell whether you love one person more than another, but you can’t measure “how much” in definable units.“ (Gordon, 2000). Anyway, no product is useful itsel, it is useful for a particular consumer who is willing to buy it.

    Ordinalist and cardinalist approach. (2016, Aug 25). Retrieved from https://graduateway.com/ordinalist-and-cardinalist-approach/

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