Utility Theory and Agrarian Societies

Neo‐classical utility theory has withstood several decades of sustained criticism. Its success has been due (1) to the ability of the theory to represent an essentially non‐analytical process by analytical methods, and (2) to the fact that the theory was developed for, and applied to, advanced market economies where the simplifying assumptions are most appropriate. It is argued below that the neo‐classical formulation is inappropriate in societies where agrarian traditions predominate and that, consequently, economic policies based on such an approach have frequently been misdirected.