Measuring the Economizing Mind in the 1940s and 1950s: The Mosteller-Nogee and Davidson-Suppes-Siegel Experiments to Measure the Utility of Money

The article studies the origin, content, and impact of two experiments to measure the utility of money, one by Frederick Mosteller and Philip Nogee in 1948–49 and one by Donald Davidson, Patrick Suppes, and Sidney Siegel in 1954. Both experiments relied on expected utility theory (EUT), and both groups of experimenters concluded that their findings supported the measurability of utility as well as EUT. The two experiments illuminate the interaction between economics and psychology in the 1940s and 1950s in several ways. First, their designs exhibit a tension between the economic image of human agency associated with EUT and insights from experimental psychology research at odds with EUT. Second, both experiments were performed by psychologists and other non-economists, and the article reconstructs how their authors became interested in measuring an archetypal economic object such as the utility of money. Finally, the article shows that the psychological insights shaping the two experiments found some further application between 1955 and 1965, but were quickly forgotten. Only in the 1970s, when robust experimental evidence against EUT accumulated, were economists compelled to reconsider those psychological insights.