Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Courses
  • Tutoring
  • Home
  • Economics, Finance, & Analytics
  • Economic Analysis & Monetary Policy

Subjective Theory of Value - Explained

What is the Subjective Theory of Value?

Written by Jason Gordon

Updated at April 24th, 2022

Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Marketing, Advertising, Sales & PR
    Principles of Marketing Sales Advertising Public Relations SEO, Social Media, Direct Marketing
  • Accounting, Taxation, and Reporting
    Managerial & Financial Accounting & Reporting Business Taxation
  • Professionalism & Career Development
  • Law, Transactions, & Risk Management
    Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
  • Business Management & Operations
    Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior
  • Economics, Finance, & Analytics
    Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles
  • Courses
+ More

Table of Contents

What is the Subjective Theory of Value?How does the Subjective Theory of Value Work? How the Subjective Theory of Value Is AppliedAcademic Research on the Subjective Theory of Value

What is the Subjective Theory of Value?

The subjective theory of value stems from the belief that the value of an object lies in how much people desire or need the object and not determined by the inherent qualities of the object. Carl Menger and Eugen von Boehm-Bawerk and other economists and thinkers of the 19th century developed the subjective theory of value. According to the subjective theory of value, the amount of labor or capital invested in the production of an object or the inherent qualities of the object do not determine its worth, rather, it's importance to people based on how much they need in meeting specific needs determines its value.

Back to:ECONOMIC ANALYSIS & MONETARY POLICY

How does the Subjective Theory of Value Work? 

The idea that the value of an object does not lie in the intrinsic properties of the object but rather on the importance and usefulness of the object to different people. When an item is useful to different people, there is a tendency of it being scarce. The subjective theory of value, when applied to the objects cannot be measured. This concept holds that the value of an object lies in how much people desire it, this desire can however and overtime, causing the value of the object to diminish, according to this concept. How much capital, resources and human labor that went into the production of the item does not determine its value.

How the Subjective Theory of Value Is Applied

Since the value of an object lies in how much people desire it and value it, the subjective value of an object can change. There are certain ways to influence or increase the value of an object. One can increase the value of an object by giving it to someone that desires it. Cultural significance of an object among a particular set of people can also determine the subjective value of the object. Situational circumstances can also increase the value of an item. For instance, a wool coat in an extreme cold weather will have more value than in hot weather due to the circumstances. Nostalgic feelings, scarcity of products and preference can also affect the subjective value of items.

Related Topics

  • Total Utility (Economics)
  • Marginal utility
  • Efficiency Principle
  • Diminishing Marginal Utility
  • Expected Utility
  • Subjective Theory of Value
  • Positional Goods



subjective theory of value

Was this article helpful?

Yes
No

Related Articles

  • Agglomeration Diseconomies - Explained
  • Law of Diminishing Marginal Returns - Explained
  • Development Economics - Explained
  • Gresham's Law - Explained



©2011-2021. The Business Professor, LLC.
  • Privacy

  • Questions

Definition by Author

0
0
Expand