Value is Subjective: A Case Study, With A Lesson on Productivity
I’ve said before that being a father has made me a better person and a better economist. Over the summer, it taught me (in a very vivid way) that value is subjective.
My three-year-old son loves his stuffed panda, Gerard. Gerard was a gift from a friend; I didn’t realize how much Gerard had cost, but it turns out that to get another, identical stuffed panda would cost us $36(!!). Over the summer, we were driving from Memphis to Great Barrington, Massachusetts where I would be spending a few weeks as a Visiting Research Fellow at the American Institute for Economic Research. We made a few stops along the way, including a stop at a McDonald’s in Harrisonburg, Virginia, where I wrote this post. We stopped for the night in Hagerstown, Maryland. As we were getting everything ready, we made an important (and horrifying) discovery.
Gerard was missing.
And so it turned out that, as we were leaving the McDonald’s in Harrisonburg, I had apparently placed Gerard on top of the car so I could buckle Jacob into his car seat. I had forgotten about Gerard as we sped off for Maryland.
With Google, it wasn’t too difficult to find phone numbers for all the McDonald’s locations in Harrisonburg, Virginia. Miraculously, someone who worked at the McDonald’s we had patronized had found Gerard in the parking lot.
It was decision time. Gerard was safe, but he was about a 90-minute drive away. At $0.50 cents/mile for gas and depreciation, going to get Gerard would probably cost about $100 round trip, to say nothing of the inconvenience of driving when I would rather be sleeping, all else equal.
As all else was most definitely not equal, the decision was obvious: I hopped in the car, made the trip, and retrieved Gerard. According to a very narrow calculation, we could have gotten a very close substitute for Gerard for $36 plus shipping. As anyone with kids knows, though, it wouldn’t have really been Gerard–and I wasn’t about to lie to Jacob and say that it was. Suffice it to say Jacob was very happy to be reunited with the genuine article. So what is Gerard really “worth?” The calculation would certainly be different in a lifeboat situation, but on a normal day I wouldn’t sell him to you for $10,000.
To reinforce the point, here’s Don Boudreaux on subjective value:
And now, the lesson in productivity: I thought “hey, I have a few minutes and a bit of inspiration; I’ll write a blog post!” I did, but if I hadn’t, I probably would have been more focused on what I was doing and saved myself the cost of going to get Gerard. I wouldn’t have this story or the lesson, of course, but I do wish that hadn’t happened.
Obligatory Disclosure: I’ve received no valuable consideration from McDonald’s, Google, the manufacturers of stuffed pandas like Gerard, or AIER in exchange for mentioning them in this post.