Health Sciences 3840B Lecture 1: Lec 1 Choice and Utility
30 May 2018
School
Department
Course
Professor
Low minimum wage –not worth it to work for people because they might have to pay child care for
example. Change in min wage changes people’s decisions and businesses’decisions
You are constrained by your budget, you have a certain amount of money to spend on what you
would like so you have to choose what will give you the most utility from what you can afford
Utility can also be explained as how happy something makes you
Utility is basis of economics but it’s hard to express and model
“u” is just some function, will be given to us in a question
Just know that utility functions depend on X L and HS as arguments
Every individual is different –we want to have reasonable assumptions to make about people’s
behaviour and apply that broadly and then the tool becomes useful
Can’t ask every person individually about which option they would pick
When are preferences not transitive?
Lec 1 Choice and Utility
May 6, 2018
3:25 PM
Health Economics Page 1
Document Summary
Low minimum wage not worth it to work for people because they might have to pay child care for example. Change in min wage changes people"s decisions and businesses" decisions. You are constrained by your budget, you have a certain amount of money to spend on what you would like so you have to choose what will give you the most utility from what you can afford. Utility can also be explained as how happy something makes you. Utilit(cid:455) is (cid:271)asis of e(cid:272)o(cid:374)o(cid:373)i(cid:272)s (cid:271)ut it"s ha(cid:396)d to e(cid:454)p(cid:396)ess a(cid:374)d (cid:373)odel (cid:862)u(cid:863) is just so(cid:373)e fu(cid:374)(cid:272)tio(cid:374), (cid:449)ill (cid:271)e gi(cid:448)e(cid:374) to us i(cid:374) a (cid:395)uestio(cid:374) Just know that utility functions depend on x l and hs as arguments. Every individual is different we want to have reasonable assumptions to make about people"s behaviour and apply that broadly and then the tool becomes useful. Ca(cid:374)"t ask e(cid:448)e(cid:396)(cid:455) pe(cid:396)so(cid:374) i(cid:374)di(cid:448)iduall(cid:455) a(cid:271)out (cid:449)hi(cid:272)h optio(cid:374) the(cid:455) (cid:449)ould pi(cid:272)k.
