Economicscalendar_todayLast updated: Apr 2026
What is Utility?
/juːˈtɪlɪti/
The total satisfaction, benefit, or value that a consumer derives from consuming a good or service. The central concept in microeconomics for modelling human preferences and decision-making.
lightbulb
Everyday Example
Choosing between a £5 coffee and a £5 book isn't about money — it's about which gives you more utility. Utility is your personal, subjective measure of value. Economics assumes you always choose whichever option maximises it.
publicReal-World Application
“Netflix measures utility through "completion rate" and "hours watched per subscriber" rather than profit per title. A show might lose money to produce but add enormous utility — and therefore retention — to subscribers.”
psychology
Did you know?
Jeremy Bentham introduced utility theory in 1789 as the foundation of utilitarianism: the moral philosophy that the right action is whichever produces the greatest utility (happiness) for the greatest number of people.
emoji_objects
Key Insight
Utility is unmeasurable and non-comparable between people. You can't add up my utility and yours. This is the fundamental problem with policies that claim to maximise "total welfare" — they require assumptions that can't be verified.
Want to learn Utility in 60 seconds?
Join 50,000+ learners snacking on knowledge daily.