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Economic Value and Costs are Subjective

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  • Stringham, Edward

Abstract

Question 1 begins by discussing an area of subjectivism where most economists agree: Is economic value subjective? This area differentiates most modern economists from classical economists and many non-economists. Question 2 probes an area where many but not all economists agree: Are costs subjective? This area differentiates many Austrian and certain neoclassical economists from orthodox neoclassical economists following Alfred Marshall’s tradition. Questions 3, 4, 5, and 6 discuss areas where even fewer still economists agree: Can we survey people’s subjective preferences? Can we measure an individual’s utility? Can we compare utility between individuals? Can we aggregate the utility of many people? For these questions one can find Austrian and neoclassical economists on both sides of the debate. Questions 7, 8, 9, and 10 look at alternative approaches to making welfare comparisons between nations that do not purport to depend on measuring subjective utility, such as looking at per capita income, migration patterns, society-wide cost-benefit analysis with dollars as the unit of measurement, and a demonstrated preference Pareto rule. Where one stands on these issues depends on how far one is willing to extend the logic of economic subjectivism. And where one stands on questions of economic subjectivism has an important influence on how one analyzes the world and what policies one recommends.

Suggested Citation

  • Stringham, Edward, 2010. "Economic Value and Costs are Subjective," MPRA Paper 25384, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:25384
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    References listed on IDEAS

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    1. Tyler Cowen, 1994. "Austrian welfare economics," Chapters,in: The Elgar Companion to Austrian Economics, chapter 44 Edward Elgar Publishing.
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    Cited by:

    1. Solomon Stein & Virgil Storr, 2013. "The difficulty of applying the economics of time and ignorance," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 26(1), pages 27-37, March.
    2. Bösch, Matthias & Elsasser, Peter & Rock, Joachim & Rüter, Sebastian & Weimar, Holger & Dieter, Matthias, 2017. "Costs and carbon sequestration potential of alternative forest management measures in Germany," Forest Policy and Economics, Elsevier, vol. 78(C), pages 88-97.
    3. William Barnett II & Walter E. Block, 2013. "Subjective preferences and alternative costs," The Journal of Philosophical Economics, Bucharest Academy of Economic Studies, The Journal of Philosophical Economics, vol. 6(2), May.

    More about this item

    Keywords

    welfare economics; economic efficiency; economic subjectivism;

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology

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