Value Theory (Subjective vs Objective)
Theories of value ask what makes something valuable. Subjective accounts emphasize individual preferences; objective accounts seek a basis independent of those preferences, sometimes in production or labor.
THE IDEA
Value Theory and the Rational Actor
Philosophical questions about value include ancient discussions of good, evil, and "The Good". Economic theories of value instead ask how to explain the value or price of goods and services.
Subjective theories emphasize how people value an item according to their preferences. Objective theories seek a basis for value independent of an individual’s preferences; some focus on labor or production costs. These are broad categories, not a single formula for determining worth.
The personal-development example considers time a man invests in trying to increase his sexual market value. Assigning a cost to those hours can estimate an investment. It does not establish an intrinsic personal value or determine how someone else will value a relationship.
When to use it
Evaluating the fairness of wages or prices in labor markets.
Analyzing consumer behavior and marketing strategies based on perceived value.
Debating ethical theories that ground moral worth in either intrinsic properties or subjective preferences.
Assessing the cost-benefit of personal development activities by both objective investment and subjective satisfaction.
FROM THEORY TO EVERYDAY LIFE
In practice
Investment in Sexual Market Value
A man records the hours he spends on self-improvement and assigns a monetary cost to that time. This estimates the resources invested, but does not establish his intrinsic worth or how attractive another person will find him.
A MOMENT TO REFLECT
Put it to work.
How does the distinction between subjective and objective value affect your understanding of price negotiations?
In what ways might your personal values (e.g., time, money) be measured objectively versus subjectively?
Think of a recent purchase: was its value determined more by subjective preferences or objective costs of production?
Often confused with
CONTINUE THE CONVERSATION
Source texts
- Rolf Dobelli - The Art of Thinking Clearly-Harper Paperbacks (2014)