Hermann Heinrich Gossen

Hermann Heinrich Gossen (7 September 1810 in Düren – 13 February 1858 in Cologne) was a Prussian economist who is often regarded as the first to elaborate a general theory of marginal utility.

Life and work

Gossen studied in Bonn, then worked in the Prussian administration until retiring in 1847, after which he sold insurance until his death.

Prior to Gossen, a number of theorists, including Gabriel Cramer, [Cramer, Garbriel; letter of 21 May 1728 to Nicolaus Bernoulli ( [http://www.cs.xu.edu/math/Sources/Montmort/stpetersburg.pdf#search=%22Nicolas%20Bernoulli%22 excerpted in PDF] ).] Daniel Bernoulli, [Bernoulli, Daniel; “Specimen theoriae novae de mensura sortis” in "Commentarii Academiae Scientiarum Imperialis Petropolitanae" 5 (1738); reprinted in translation as “Exposition of a new theory on the measurement of risk” in "Econometrica" 22 (1954).] William Forster Lloyd, [Lloyd, William Forster; "Lectures on Population, Value, Poor Laws and Rent" (1837).] Nassau William Senior, [Senior, Nassau William; "An Outline of the Science of Political Economy" (1836).] and Jules Dupuit [Dupuit, Jules; “De la mesure de l’utilité des travaux publics”, "Annales des ponts et chaussées", Second series, 8 (1844).] had employed or asserted the significance of some notion of marginal utility. But Cramer, Bernoulli, and Dupuit had focussed upon specific problems, Lloyd had not presented any application, and if Senior actually employed to the development of more general theory [White, Michael V; “Diamonds Are Forever(?): Nassau Senior and Utility Theory” in "The Manchester School of Economic & Social Studies" 60 (1992) #1 (March).] then he did so in language that caused the application to be missed by most readers.

Gossen's book "Die Entwicklung der Gesetze des menschlichen Verkehrs und der daraus fließenden Regeln für menschliches Handeln" ("The Development of the Laws of Human Intercourse and the Consequent Rules of Human Action"), published in Braunschweig in 1854, very explicitly developed general theoretical implications from a theory of marginal utility, to the extent that William Stanley Jevons (one of the preceptors of the Marginal Revolution) was later to remark that Quote| [I] t is quite apparent that Gossen has completely anticipated me as regards the general principles and method of the theory of Economics. So far as I can gather, his treatment of the fundamental theory is even more general and thorough than what I was able to scheme out. [Jevons, William Stanley; "The Theory of Political Economy", “Preface the Second Edition” (1879).]

However, "Die Entwicklung" was poorly received, as economic thought in Germany was then dominated by the Historical School and as Gossen wrote it in a dense, heavily mathematical style which was quite unpopular at the time. Although Gossen himself declared that his work was comparable in its significance to the innovations of Copernicus, few others agreed; most copies of the book were destroyed and, today, only a few original copies exist.

In the 1860s and 1870s, Jevons, Carl Menger, and Leon Walras each reintroduced the theory of marginal utility. During discussions of which of those three had been the first to formulate the theory, a colleague of Jevons discovered a copy of "Die Entwicktlung".

References

* Gossen, Hermann Heinrich; "Die Entwicklung der Gesetze des menschlichen Verkehrs und der daraus fließenden Regeln für menschliches Handeln" (1854). Translated into English as "The Laws of Human Relations and the Rules of Human Action Derived Therefrom" (1983) MIT Press, ISBN 0262070901.

See also

* Gossen's laws
* Marginal utility
* Gossen's second law
* Scarcity
* Marginalism