Value is Subjective

Todoy, I would like to welcome David Rosenberg back!  

Just over fifty years ago (July 1965), the Rolling Stones had their first number one hit (I Can't Get No) “Satisfaction.”  The Stones iconic front man, Mick Jagger, was perhaps more well-known for his very distinctive dance moves rather than his lyrics.  Regardless of whether you think he was a good dancer or not, Mick Jagger definitely showed SATISFACTION in his moves.

You too should GET satisfaction with your spending. Have you ever caught someone (who usually doesn’t dance) dancing wildly because of the rhythm of the music moved them to do so?  Didn’t they look satisfied (at least until they realized you were watching)?  This is what we call utility value. And it’s a VERY subjective thing!

The value someone places on goods or services is different from the value another person places on the same goods or services.

This is known as the subjective theory of value. Sometimes differing views on values come up in relationships. If you VALUE your relationship, you had better recognize! - recognize how much people have different desires and differing preferences. We may be talking about your partner here!

If you believe in the “happy wife, happy life” motto, you should focus on utility value – how much enjoyment, satisfaction, benefit or worth you or your partner get from a particular good or service.

Make a short list of what seems to be important to your partner. There may be some Venn diagram or overlap.  For example, my wife Dee and I both really enjoy a good long weekend.  There are also many individual things we value differently.

Let’s look at something VERY important to my wife – mani-pedis. Economists may consider mani-pedis to be a variable expense, but my wife firmly believes that they are a must for any woman.

I don’t keep track of exactly how often this “necessity” occurs (I think every two weeks or so), but I do know if too much time has passed since the last one, it is very similar to rushing someone to the emergency room.

For me, golf on a really nice course, is something I place a lot of value in.  I try to play at least as often as my wife gets mani-pedis. 

Take notice of when you are spending money on things that bring you great satisfaction.

Do you or someone you know love to find bargains or sales?  This is because of the distinction between value and price.  For example, if you see a blue shirt on sale from a brand you trust, you buy the shirt because the value is greater than the price.

But if one blue shirt is good…are two better?

Economists refer to this as ‘marginal utility value.’  Attributed to Carl Menger, this asserts that the utility value goes down the more you consume the same item.  Have you ever craved an ice cream cone then had pure bliss as you enjoyed that delectable treat? Sure! But if you had a second one…maybe not so much!

Take note of how much utility value you get from all of your purchases in the next few days, ranking them 1- 10, and let us know what you see.  Does it make you dance like no one is watching?  It worked for Jagger!

David Rosenberg

CEO/Founder | BudgetReferee

11911 Freedom Dr. Suite 850

Reston, VA 20190