Subjective Theory Of Value
Definition of 'Subjective Theory Of Value'
The idea that an object's value is not inherent, and is instead worth more to different people based on how much they desire or need the object. The Subjective Theory of Value places value on how scarce and useful an item is rather than basing the value of the object on how many resources and man hours went into creating it.
This theory was developed in the late 19th century by economists and thinkers of the time, including Carl Menger and Eugen von Boehm-Bawerk.
Investopedia explains 'Subjective Theory Of Value'
For example, let's say you have one wool coat and the weather is extremely cold outside, you will want that coat to wear and keep you from freezing. In a case like this, the wool coat might be worth more to you than a diamond necklace. If on the other hand, the temperature is warm, you will not want to use the coat, so your desire for - and amount you value - the coat wanes. In effect, the value of the coat is based on your desire and need for it, thus it is the value you placed on it - not any inherent value of the coat.