The theory developed by neoclassical utility should be taught to new issues due to the development of social capital theory.

Much of the economic assumptions are based on the utility theory. According to this theory, all individuals maximize their happiness with increasing consumption But happiness growth reaches a maximum after which, if the individual continues to consume indefinitely, may even hurt.

The axioms of consumer

Consumer theory rests on three axioms, the insatiability of the ranking and the transitivity. Since the individual prefers more to less, order their preferences and act rationally, so if you prefer A over B and B over C, then prefers A over C. But along this theory in no time is taken into consideration that consumer happiness depends also happy to see other consumers.

That is, consumer theory places the consumer never as social beings with emotional needs. Treats it as an isolated and selfish pleasure which only depends on his own satisfaction. However, studies have been made on social capital, the theoretical presentation should include the satisfaction you get the man to help other men to be happy.

social-capital

Social capital theory

The social capital theory, believes that individuals gives happiness happiness of others. Which could be from his closest, family and friends to the most distant, such as strangers. This theory is supported by several studies have shown that individuals actually gives happiness satisfaction of other consumers.

So how to explain the existence of the Rotary Club, for example, or groups of Alcoholics Anonymous or the Red Cross or other Nobel Foundation. But how could one explain the utility theory without contradicting these facts? From the utility theory, would be to assume that income is a way to get happiness, as consumption becomes. Thus, there should be a series of combinations between consumer income and consumer X Y where X would be indifferent consumer.

What if a consumer happiness X depends on Y is so happy? According to the theoretical approach, a way to give happiness to Y is that X will give part of their income. Assuming that the happiness of Y depends on consumption only. This would reduce the consumption of X what would lower their happiness but their happiness increase while when Y is happier. Therefore, the axiom of insatiability no longer apply. But if A and also gives happiness happiness of X, the outcome would depend on the preferences.

Effects on public policy

Thus, for both were happy should necessarily increase national income, for both earn more. But according to social capital theory, X can be happy if part of your income it provides to Y, and vice versa. What I would not necessarily increase the GDP but also can be redistributed. But how far should redistribute income to increase the happiness of both subjects?

As mentioned, depending on the preferences and the magnitude of love that takes both. In turn, preferences depend on education, culture and the needs of each person. Also depend on the trust in institutions that provide assistance and trust is put to the beneficiary. Therefore, it is also possible that the richest individual acting alone and decided to donate it to spend less poorer, increasing their level of satisfaction.

Consumers or persons

Note that this approach may provide a greater range when deciding on the public budget and spend the money if you have a taste for philanthropy. Because consumers are more people in addition to their own happiness, satisfaction also gives happiness, at least their parents, their children and loved ones. In addition to the formal and informal education can help strengthen one’s attitude towards others even if they are strangers.

And, we may not be as selfish as the theory shows. What may be happening is that we have lost touch with ourselves. Perhaps we are too busy to watch what happens around us. We may not be aware of how necessary it is that good health and attitude of others. Maybe we do not have the sensitivity to lack of experience of poverty.