If we are rational about our economic activities then each decision is the result of a cost-benefit analysis. The details of the cost-benefit analysis depend (to a great extent) on the beliefs which we have.
For example, if I am in MOM Park Shopping Centre in Budapest and want to buy some lunch I could spend it at Macdonalds or somewhere else. If my cost-benefit analysis considers only the cash cost and the immediate satisfaction of hunger, then I might well go for Macdonalds. If the scope of the cost-benefit analysis is broader then I might consider health and taste, in which case I might instead spend my cash at Da Lello’s or at the vegetable store two floors lower.
So my “utility function” depends on the beliefs I hold and the influences I experience.
There are economic ramifications of that decision. In one case a lower portion of the cash I pay goes to local employment than the other, benefitting a local economy rather than a distant economy; in one case, resulting healthcare costs will be higher than in the other, causing more economic stress than in the other case; in the one case I might be more likely to recommend to someone else to visit the restaurant.
It is trivial that our choices lead to different outcomes. But because different outcomes have different economic effects, it also follows that different utility functions have different economic effects; that is, different sets of beliefs lead to different economic effects.
To the extent that the difference between these economic effects is material, it is important for economics to understand what beliefs lead to different economic effects. Otherwise, for example, an effort to boost the economy by economic stimulus might fail or, worse, backfire.
