Economic Models

Abstract

This chapter introduces utility functions and concentrates on consumption for both the individual and society. Given the contrast between maximizing shareholder wealth and triple bottom lines, this chapter will discuss utility functions with an emphasis on consumption models. The case for sustainability will rely on social distance measures for the intergenerational and intragenerational transfers where the utility is a function of time value of money and social distance (Becker 1968 and Anderson and Myers 2018). The discussion of utility will be supplemented with discussions of von Neumann–Morgenstern Utility, transitivity, and one-period models versus multi-period models as a means of discussing the framing of sustainability beyond traditional finance models.