The cardinal utility is the accurate measurement of dimensions, thereby utilities that provide different goods to a consumer can be set safely and compare the few differ from others.

According to the theory of this utility, you can quantify and observe the satisfaction that a customer has with a certain product or service, in addition to the utility that can be obtained from them.


Cardinal Utility Goals

  • The cardinal utility has the objective of explaining why people do not get carried away by the expected economic value since this theory looks for a way to increase the expected value of some type of utility and not of the economic value.
  • In this type of theory, the volume of the utility’s difference between the two products is assumed.
  • It is easy to know if a certain person has a preference from one good to another since by allowing him to choose between the two, it will be seen which one he prefers. In this way, the product or well-chosen will be given more utility and not the rejected one.
  • Any type of assignment that contains this type of procedure is known as a utility function. In this sense, this criterion allows knowing whether one good is much more useful than another for a person.
  • To know if a person likes one good more than another, there are various definitions. It will all depend on whether he likes more than the other and if he is willing to pay double value for that good if he does not mind going to a place of greater distance for getting it or wait much longer to get it, despite having half the chance of having it.
  • Each of these probabilities can assign utility levels that give importance to the magnitude of the value that it has. However, even though each of them has a possible interpretation of wanting to acquire one good more than another, none can be said to be totally convincing.
  • Despite the existence of a model that assigns different levels of utility that allow satisfactory results to determine consumer selection, it is also necessary to know which good a person prefers and which has greater utility and which offers more benefits.

How Cardinal Utility is measured

This type of utility can increase, compare, and order the data in the same way as the numbers. In order to understand how the degree of utility of the good or service is measured, this average provides certain value to the consumption of themselves, depending on the needs, amount of consumption, and priorities that the customer has.

The measurement of cardinal utility can be highly beneficial in many cases, since it can know and accurately compare the value that good has for a person, allows us to have knowledge of the marginal utility that leads to twice the consumption of the good and order the products depending on the level of utility it has for the consumer.


Advantages and disadvantages of Cardinal Utility

This type of utility includes a series of advantages and disadvantages, such as the following:

Advantages of cardinal utility

  • You can keep the order of the goods depending on whether they have a greater or lesser utility.
  • All consumer preferences can be captured within a graph, through a curve where the axes represented contain the consumption number and obtain the amount of profits.
  • It provides an opportunity to know exactly what good value can have for an individual.
  • It is possible to make determined calculations of the marginal utility that shows the good per unit’s additional consumption.
  • Exact value comparisons can be made that differentiate between different types of consumers.

Disadvantages of cardinal utility

  • In practice, this type of utility does not exist, since there really is no way that an accurate measurement of the level of satisfaction that a person can have when consuming a good can be achieved.
  • Instead of assigning exact values ​​based on priority and order, many economics professionals prefer to focus on using the ordinal utility.
  • This type of utility is not usually a reality because people do not accurately measure the value that good can have; therefore, it is a utility full of assumptions.

In general, the cardinal utility is an economic term that serves to measure customers’ expectations on how useful goods and services can be, beyond what is expected of the monetary value that they may have.

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