I was reading a charming fantasy novel and it reminded me of how difficult it was to understand value. In economics, we measure utility in dollars and expect goods to be interchangeable. But there are so many items we can trade that are less tangible than guns and butter.
In this book (Guardian’s Key, if you want to know), the protagonist is stuck in a magical castle where you cannot get something for free, but must trade “value for value” and this could be just about anything: food, gems, thoughts, advice, even simple companionship. It’s a perfect barter economy.
When we see the monetary impact of things that do not have monetary value, we often file this under the realm of behavioral economics, but many of these phenomenon are simple decisions based on individuals’ value of things not easily pricetagged. Take for instance at work, the value of responsibility or titles or trading a cubicle for an office, sunlight from a window. These items have value. They are tools of compensation and the savvy manager will recognize that there are many ‘free’ benefits that can be offered. These are not a mystery of psychology but merely differences in individual preferences.
Next time you consider who gets the new vacant office, remember, some people are going to value that extra space more than others.