The subjective theory of value, also known as the theory of subjective value, is an economic theory of value that identifies worth as being based on the wants and needs of the members of a society, as opposed to value being inherent to an object. It holds that to possess value an object must be useful, with the extent of that value dependent upon the ability of an object to satisfy the wants of any given individual.
"Value", in this context, is separate from exchange value or price, except insofar as the latter is intended to help identify the former; the value of any good or service simply being whatever someone would trade for it in the present. This creates problems as consumers tend to bid up prices if they are funding demand with credit. This tends to separate subjective values from stable values.
The theory recognizes that one thing may be more useful in satisfying the wants of one person than another, or of no use to one person and of use to another. The theory contrasts with intrinsic theories of value that hold that there is an objectively correct value of an object that can be determined irrespective of individual value judgements, such as by analyzing the amount of labor incurred in producing the object (see labor theory of value).
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Famous quotes containing the words subjective and/or theory:
“every subjective phenomenon is essentially connected with a single point of view, and it seems inevitable that an objective, physical theory will abandon that point of view.”
—Thomas Nagel (b. 1938)
“There is in him, hidden deep-down, a great instinctive artist, and hence the makings of an aristocrat. In his muddled way, held back by the manacles of his race and time, and his steps made uncertain by a guiding theory which too often eludes his own comprehension, he yet manages to produce works of unquestionable beauty and authority, and to interpret life in a manner that is poignant and illuminating.”
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