The utility function and the emotional well-being function

Abstract

Behind the utility function, which is the basis for economic and finance theory, is a philosophical and ethical approach based essentially on the Utilitarian and Hedonistic schools. Once qualitative, the utility function’s approach shifted to a quantitative one based on the work of the mathematician, D. Bernoulli. This quantitative approach is normative and based on a maximizing agent. In this paper, the “emotional well-being” function is developed which mixes the ethics of a rational economic individual with those of a more complete individual who is simultaneously conditioned by economic, instinctive, social, religious, ethical, and esthetic values. This new utility function of emotional well-being is shown to remain within the envelope function of the Bernoulli-type utility function.