The cardinal approach states that economic satisfaction can be found and measured by an absolute number. The ordinal approach disagrees with this, and states that economic satisfaction can only be found if the numbers and values can be given a rank.
The cardinal approach would suggest that whenever you engage with something, this can be measured using what is known by economists as utility numbers. This then means that there should be two corresponding values that display total satisfaction.
The ordinal approach suggests that satisfaction cannot be measured in this way. Instead, economists should look at satisfaction and compare them equally. This then leads to the idea of giving satisfaction a rank, for example:
Economists in the modern day mostly tend to adapt the ordinal approach, as the cardinal approach is viewed by some as being out of date. However, there are occasions where the cardinal approach is still applicable to use, for example in the event of evaluating utilitarian welfare or making decisions that carry considerable risk.
Both approaches have been used by economists throughout their existence, and it would not be right to tell one individual which one is better. It all revolves around which approach an individual finds works best for their needs in a situation where economic analysis is required.
The cardinal approach would suggest that whenever you engage with something, this can be measured using what is known by economists as utility numbers. This then means that there should be two corresponding values that display total satisfaction.
The ordinal approach suggests that satisfaction cannot be measured in this way. Instead, economists should look at satisfaction and compare them equally. This then leads to the idea of giving satisfaction a rank, for example:
- The consumer prefers orange juice to apple juice
- The consumer is indifferent to both orange and apple juice
- The consumer does not prefer orange juice as much as apple juice
Economists in the modern day mostly tend to adapt the ordinal approach, as the cardinal approach is viewed by some as being out of date. However, there are occasions where the cardinal approach is still applicable to use, for example in the event of evaluating utilitarian welfare or making decisions that carry considerable risk.
Both approaches have been used by economists throughout their existence, and it would not be right to tell one individual which one is better. It all revolves around which approach an individual finds works best for their needs in a situation where economic analysis is required.
