In page navigation
Interpersonal comparisons
Invezz is an independent platform with the goal of helping users achieve financial freedom. In order to fund our work, we partner with advertisers who compensate us for users that Invezz refers to their services. While our reviews and assessments of each product on the site are independent and unbiased, brands may pay to appear higher up our table rankings or place ads in specific areas of the site. The order in which products and services appear on Invezz does not represent an endorsement from us, and please be aware that there may be other platforms available to you than the products and services that appear on our website. Read more about how we make money >
Comparing the welfare of one individual with that of another. The welfare level of an individual is measured by a ’utility function. Utility can be ordinal so that it is no more than a numbering of indifference curves. An ordinal utility function can be subjected to any monotonic increasing transformation,/ without changing its meaning: the initial utility function U and the transformed utility U* =f{U) are equivalent. Utility is cardinal when the initial utility function U is equivalent to the transformed function U* = a + bU only under affine transformation. An example of cardinal utility is an expected utility function. Non-comparability means that different transformations can be applied to different consumers’ utilities.
If the underlying utility functions are cardinal, there are two important forms of comparability. For cardinal unit comparability the consian multiplying utility in the transformation must be the same for all consumers, but the constant that is added can differ.
Reference: Oxford Press Dictonary of Economics, 5th edt.
More definitions
Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >