Zen Utility - packaging ancient wisdom into modern economic theory

To simplify ... first I critique some of consumer choice theory, then introduce the piece of ancient wisdom, then a crash course in consumer theory, then derive Zen utility, find three applications, then burn it all up in a surprise move to the Zen theory of the green economy.

The main goals are to poke fun at consumer theory and to play with consumer theory to develop a theory of development that isn't based on the number of widgets produced or the amount of useless stuff we consume.

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This is an idea that crossed my mind over the summer when going through the requisite indoctrination in consumer theory and price theory. The main intuitions that come from this indoctrination is that no matter what governments do, they always make people less happy. It assumes that we always know the effects of every choice we make, and that we are therefore always capable of ranking all the choices that we could make in a way that’s optimal to our utility.

The profs all know it's quite simplistic, although there are definitely major insights to be gained from it too, and I admit that the simplifications make it easier to start learning the math that’s needed for economics. But WOW, it felt like brainwashing by the second week. (I should mention that I don't think it's the case, and that the teaching skills of professors in economics is much better than I would have expected). Perhaps my background as a specialist in political science leads me to immediately pinpoint the ideological nature of an analytical tool. As a prof of mine, Richard Day, said many times, “the facts never speak for themselves.” In this case, just because it’s a mathematical tool doesn’t mean that it can’t carry an ideological bent.

Continuing with consumer theory … Since individuals have this infinite knowledge (or at least, infinite intuition to make choices as though they had infinite knowledge), then anything the government every does will interfere with our ability to be as happy as possible. There are a whole series of reasons that this is not true, notably market externalities and imperfect information . These are also acknowledged in the study of economics, but unfortunately, the roots of some theory bypasses these problems. It works out great for extreme libertarians or laissez-faire capitalists who parrot these ridiculously oversimplified theories to deny any potential role for the government to improve things.

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The idea ..

OK, so what is it that crossed my mind? I’ll apologize for getting a little mathematical and abstract pretty shortly. The math isn’t needed to express the point, but packaging it all up within the confines of consumer theory is something that, on the one hand I find funny for some absurd reasons, and on the other hand, I take some odd pleasure on turning consumer theory completely on its head. I’m struggling with the design of the packaging though. It makes sense to me, but this probably reads like mumbo jumbo, since few people are familiar with economics or eastern philosophy, and I’ve definitely never met an economist with a significant interest in the latter of these.

I call it the Zen theory of utility, and what comes after the next paragraph is not likely to make sense to anyone who is unfamiliar with formal economic theory. I’m trying to figure out how to develop it into a theory that is digestible by mainstream economics. There’s nothing new here, I’m just repackaging and ancient piece of wisdom into the form of consumer theory. This is totally a parody, but is also for real. The following summarizes the piece of wisdom that I’m working with.

Ever heard the phrase “desire is the root of suffering”? It’s a Buddhist principle that we suffer because we don’t have things that we want. The more we want, the more we suffer from having to go about satisfying these wants, which all too rapidly become perceived needs. Therefore, a pathway to happiness is to want less, have a greater sense of satiation for any level of material fulfillment, and therefore be able to focus on spiritual inquiry or meditation. At the extreme, you want nothing, are happy with everything you have, and have a sense of extreme fulfillment as a result of the capacity to genuine personal development when giving up all your desires.

Now to introduce the economics … Try to follow… Here’s a standard form of a consumer’s happiness, or what economists call “Utility”, that results from a given good. For example U(x) = 2x. The U indicates utility, the x indicates that utility is a function of how much x you consume, and the 2x indicates that your utility increases by 2 for each unit of x you consume. Let’s say that x is gummy bears and that utility is measured in ‘utils.’ If I eat 5 gummy bears, I will get 10 utils worth of happiness. In principle, it doesn’t matter what the resulting utility is, what matters is that I can rank the utility of one choice to another, and with our infinite knowledge we can always buy things that will make us happiest.

How about this one … U(x,y) = x^2 – y. Utility is now a function of two goods, x and y. Let’s say that x is … the number of hours spent learning stuff that gives more or better philosophical and technical tools to improve my ability to question what’s going in the world … while y is the number of hours spent memorizing or regurgitating oversimplified economic theories that tell me how governments mess things up (which they sometimes do, but it’s surely not a matter of faith). Each amount of time I have to learn cool stuff is even more pleasing than the previous one, but I dislike memorizing crap equally for each hour I have to do it.

Consumer theory appears to have some difficulty dealing with the reality that we will eventually get tired of some good, doesn’t it? Well, not really, since one of the basic principles is that people like diversity in their consumption bundle. There are also a couple simple ways that this can be expressed mathematically. One way is to have an exponent on the consumption variable less than 1 (which means that the enjoyment I get out of each subsequent unit declines, until I get to a point where consuming the next unit decreases the utility I get out of consuming so much of that good.

Alternatively, a statement such as U(x) = log(x), and lets call x thinking happy thoughts, may always increase my utility for the next period of time I spent thinking happy thoughts, but the marginal value, or the value of the next unit of time I spend thinking happy thoughts continuously declines. I will eventually get bored and go do something interesting, since the marginal utility would be higher.

So isn’t it clear how this is the Zen theory of utility? .. didn’t think so. I’m not there yet. I’m just laying some basic grounding of utility theory on the off chance that someone’s trying to figure out what the hell I‘m talking about. But IT’S TOTALLY AMAZING, JUST YOU WAIT!!! Well, I think so anyways.

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The theory …

U(x,y) = x + ln y . WTF is that? “ln” stands for the
natural logarithm, a commonly used mathematical tool to express rates of change in models of real world phenomena. The link to an image of the natural logarithm function may come in handy later on. For each unit of x, my utility increases by 1, and for each additional unit of y, my utility increases by ( ln(y + 1) – ln y ). I call them x-goods and y-goods. The whole reason I found this funny can be found be reading them out loud.

I’m going to pull a fancy little trick here and define each type of good, such that y = 1 when we consume a sufficient amount of that good such that we no longer suffer from the absence of it. That’s key here. y = 1 is whatever amount of that good is required to avoid suffering, but not enough to enjoy use of the good. This trick is commonly known as standardizing units. I’ll turn around and weight these standardized units later on. That’s allowed too.

People these days tend to experience significant disutility from not owning a bed. Since ln y is less than zero when the number of beds is less than one(presumably people don’t own half beds, but they may share beds or have high quality or lower quality beds, but for the sake of simplicity, I will define all beds as being equal and that the utility from having a bed is the same whether there are one or two people in that bed … now don’t you be getting any naughty thoughts. This is the Zen theory of utility, you hear … save that for later!).

As for me, I haven’t had a bed for years, and sleep quite comfortably. Still, that doesn’t stop me from thinking that there must be a good deal of room for a little hanky panky in the x-goods, although it’s not purely compatible with the theory. It doesn’t really fit the model since it’s one of those things where each incremental unit may increases utility for some people by more than the previous unit, over for a given period of time, but the maximum number of units over a given time period may face certain limits. In any case, I haven’t even defined x-goods yet, and in general, I sure don’t mean X-rated goods.

Another example of a y-good would be one sufficient daily quantity of food to avoid suffering. Anything less than that and you suffer, anything more and you get actual enjoyment out of things.

As for x-goods? I’m going to initially define x-goods as luxury goods, with a very narrow definition of being goods that are not perceived needs. This will change in the final movement to Zen utility.

Now, if referring to the graph of the natural log, look at what happens when you get less that a sufficient quantity of a given kind of y-good, you’ll notice that the ln function becomes significantly negative when less than 1 (in the case, the vertical axis is utility and the horizontal axis is the quantity of y, with y = 1 being the quantity of that good to avoid suffering.)

Recall the ancient wisdom, that you can find greater fulfillment when you want less. I’m going to spin a little magic now.

If y goods are all goods that we desire, then we can create a 1 x n matrix called Y (a standard name for a matrix that corresponds with a class of variable). n is the total number of y-goods, or goods that cause suffering if we don’t have a certain amount of them.

That is, that Y = [y1, y2, … , yn], a 1 x n vector. These y-goods each have a price, represented in the n x 1 vector being Py, with elements{ py1, py2, … , pyn}. Of course, yi will not always equal 1, since I may be willing to deprive myself of some good in order to increase my pleasure from a good that gives be more utility for the next dollar spent.

Some fancy utility maximization formulas could be illustrated here, but a simplification is sufficient to make the point. When the amount of consumption of y-goods increases to the point that U(Y) = 0, and the utility from the next dollar spent on each y-good is equal for the all y-goods, we can find the cost of making perceived material suffering equal to zero. This can simply be done by multiplying these vectors, such that M Py results in the total price of satisfying perceived needs.

If C-nosuf is the cost of avoiding perceived suffering associated with material wants, this can be derived as follows.

C-nosuf = min Σ pyiyi , subject to Σ ln yi = 0 , i = 1, 2, … n

That is, find the lowest price to achieve a utility of zero associated with perceived needs. If we decide to desire less of a good, is would be cheaper to avoid suffering. This could be called weighting the variables. I’m going to develop this class of weighting variables using two classical philosophical treatments, rational–choice and passions.


I should point out an important flaw in the utility maximization formula. I pretended that there are no x-goods. It is, in fact, quite possible that people might give up some y-goods, and suffer as a result, in order to buy some x-goods, even when not consuming that x-good would cause no suffering. This would happen because the consumer figured that the value of consuming a certain quantity of the luxury good provided more utility than they would get from the amount of y-goods they could consume with that money. For example, when I arrived in Australia, I only had a few hundred dollars. I then proceeded to travel on the cheap for a week, and ate simple pastas for several weeks while waiting for my first paycheque at the orchards. Of course, that had more to do with incomplete information, since I had no idea how long it’d take me to find work. I have altogether too many similar stories, largely from excessive confidence that I can find work inside a day, when it commonly takes a week. If anything, the study of economics has taught me that I’m not entirely rational, but hey, I like the way I live my life. It’s great to never know what’s going to happen.


Classical economics generally treats all choices as rational (hence consumer-choice often being called rational-choice theory). However, it seems odd to me that conventional economics then assumes that our rationality does not extend to any ability to choose preferences. There’s a half truth there, since we are animals, but our rationality is surely not limited to figuring out how to get the best consumption package given untameable passions and a given resource allocation.

I’m going to decompose the weight for each y-good into ai and ri, where a represents the ‘animal’ portion of this weighting, subject to little rational control, and r represents the ‘rational’ portion of the weighting, where (ai + ri = 1), i = 1, 2, … n, at time = 0 (in other words, before engaging in Zen weighting).

When a is relatively high for a y-good, this is probably a good that will be difficult to limit our desire for, since the desire for this good is probably linked to animal needs. That is, a is assumed to have a constant value for each individual for each y-good. This is intuitively somewhat unrealistic since it will carry a different weight as the consumption of the good increases or decreases. This has already been addressed by standardizing the consumption of each good to time = 0. The frequency of ai = 0 for all y-goods is therefore a strong predictor for an individual’s potential to reduce the cost of achieving zero utility, that is, to avoid suffering from perceived material deprivation. When r is relatively high, there is similarly a strong potential to reduce the desire for this good, and is also a good target for further minimization of the cost of achieving zero utility. In general, it is assumed that the majority of goods in the consumption bundle will have a value of ri = 1.

This only requires a minor modification of the previous minimization, such that the cost of achieving zero utility, or avoiding suffering associated with deprivation of perceived material needs,

C-nosuf = min Σ pyiyi , subject to Σ (ai + ri) ln yi = 0,
i = 1, 2, … , n
ai + ri = 1 at t = 0

Involuntarily missing out on 50% of one’s daily intake of food clearly causes more suffering than missing out on 50% of one’s daily intake of rock and roll. For the sake of simplifying the math, let’s assume that the utility function for all y-goods has the same shape and size as the natural logarithm. That’s the power of economic theory. I am at complete liberty to make completely unrealistic assumptions in an effort to make my theory coherent. I will therefore assume that all goods offer the same utility or disutility for any given value of y (recall that these are standardized to y = 1 for a sufficient quantity to avoid suffering), even when U(yi) ≠ 0, regardless of what time frame we’re talking about. The previous mathematical statement is therefore true.

ai is not assumed to be the same for two individuals. There are two reasons for this, being different starting points and a diversity of animal needs within the population.

The first reason is that, at t = 0, the value of ai may already be very low. A subsistence farmer may have an a-value of 1 for food consumption. That’s not to say that the farmer doesn’t have any space for spiritual or philosophical inquiry. It means that they are presently consuming just enough food to survive. This may equally be the case for an individual who has already made a conscious decision to seek happiness through reduction of material desires. On the other side of that is someone who feels deprived when they don’t get to eat at fine restaurants on a regular basis. In such a case ai is nearly zero.

The same two individuals can be taken to illustrate the second reason. If the subsistence farmer is a seven foot tall subsistence farmer from northern China and the fine-diner is a four foot tall French guy with skeletal dysplasia, then ai is likely to be lower for the little guy, for any initial level of expenditure on food. That is to say, that not everyone has the same animal needs.

In general, the lower bound for (ai + ri) for any good for any individual is ai itself, and the upper bound of that sum is 1. Any doubts of the upper bound arising from social pressures should not be relevant, due to an assumption that rational individuals have some degree of ability to consciously decide how much social pressures will affect their utility optimizations. Certain Janists would certainly beg to differ with the assertion that the lower bound for the weight is ai. They may be quite correct that a strong willed individual can open up additional space for meaningful spiritual inquiry when the value of ri is negative for a particular good. Such methods of spiritual investigation where animal desires are conquered by the will are likely to have an average value of r being close to zero or even negative.

The benefits of negative ri values are, to say the least, questionable, in some circumstances. Freud would certainly see the effects as destructive. Alternatively, some especially strict religious views may lead to sub-optimal utilities because of unknown negative r-values resulting from incomplete information about the animalistic origins of certain inclinations.

However, at the level of the group, negative values for some ri's may be conducive towards greater social harmony, even when the impact may be some suppression of our animal selves. To paraphrase Rousseau, we may be forced to be free by social or legal conventions, since they help us all get along better.

The general insight? MINIMIZE n FOR ALL y-GOODS, AND REDUCE ri FOR AS MANY yi AS POSSIBLE. WANT LESS, HAVE MORE.

THAT’S IT!!!!!

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Just kidding. I’m more or less done laying out the general framework, and have already spent an hour longer on this than I’d planned. But, I’ve happened across all sorts of surprising ground along the way and I’m curious to see where I end up. Surprisingly, the theoretical development is still working largely within the framework of a typical derivation in consumer theory. Mainstream packaging seems to work for this ancient piece of wisdom.

There are three strategies we can take U(X,Y) = x + ln y from here, each with their own practical applications. They all stem from the principle of reducing the number of perceived needs and reducing the weight of each need.

The first strategy is to expand consumer choice of luxury goods (x1, x2, … , xm), since the size of m for x-goods presumably increases as n is minimized for y-goods. It is more or less known ‘fact’ among economists that increased choice allows us to maximize utility more effectively. Meanwhile, x-goods presumably offer greater utility at any quantity as compared to when it was perceived as a y-good (since we can truly appreciate even the first unit when we don’t take or for granted, or see it as a basic requirement). The deduction is not overpowering, but is not inconsistent with expectations for logic in the field of economics. As such, I propose that minimizing n for Y while reducing the weight allocated to each good when calculating C-nosuf will necessarily improve utility via improved consumer choice.

The second strategy is to keep consumption constant while eliminating the suffering that results from unsatisfied material desires. This is more intuitively obvious. Wanting less stuff and being less concerned about the stuff that you really want but don’t really need (reducing the weight of this ‘need’), should lead to improved satisfaction without going through the trauma of changing consumption habits.

In case you haven’t noticed the flaw yet, I’m still treating these luxury goods as things that provide the same pleasure for each unit, no matter how much we consume. This is what led me from the CAPs above to the following points.

What ARE things that we can get more utility out of no matter how much of them we get? Could it be a class of non-consumption goods called social and personal development. The currency is time, and the returns on investment are personal satisfaction. This perhaps isn’t very compatible with the idea that ignorance is bliss. If you’re one of those types, stick with option two. It’s quite admirable as well, and is a Zen utility maximization in its own right. But you could go further.

The last strategy initially maintains constant utility at lower consumption bundles by minimizing perceived needs, allowing the individual to allocate more time to personal growth, development, and the pursuit of happiness. Utility from x-goods can now increase ad infinitum.

This next sentence is absolutely key. Progressive continuation of n minimization and r minimization, can be considered as permitting placement of one’s spiritual and social development in the category of goods that constitute X. The target is still to maximize m for x-goods and minimize n for y-goods. In such a case, the function U(X,Y) = x + ln y would come to approximate mX. Situations where x-goods approach infinity would require extreme generosity with y-goods to meet the quasi-linearity test for any given level of utility. This would be very useful indeed in driving personal growth and development en route to transcendental enlightenment, or at the very least, genuine happiness.


I knew it would lead to some interesting theory if I tried to get it on paper. I had the beginning and the end, and had no idea how to connect the dots. Cool … will certainly need some revising though.


ahaa… so say goodbye to the util!!! OK, so if you think Zen utility is bogus, then I’m not too stressed about it. Good insight for me, nonsense to you … whatever. Your appreciation of the Zen theory of utility is a y-good for me, to which I’ve attached a low weight in the matrix.


Instead, I’ve just decided to classify appreciation of the Zen theory of utility as an x-good in cases where it is appreciated as the theory of green utility maximization. Consume less, enjoy more. Place some Zen-x-goods into the Y-matrix, and there may be potential for non-material, economically valuable goods. These already exist, such as arts, culture, and many aspects of the information economy. Zen utility, bastardized and appropriated to a form of capitalist growth that could satisfy our drive to perceive ever greater standards of living in the face of tensions between technological progress and increasing resource scarcity.

No new ideas here, just recycled packaging.