The notion of value is inherently subjective and arbitrary. The value we place on something – what is it worth? – is actually a social activity. Something is worth the value that people in our society place on it. This value is often determined by economic factors such as something’s usefulness (utility), its scarcity, the ease with which something else can satisfy our need or desire (substitution), and the classical yin and yang of supply and demand in that society. Value will also change over time based on macroeconomic conditions, changes in technology, demographic changes, and shifts in personal preferences.

There is no inherent value in anything. Value in this sense is relative and comparative. This item is worth more than that item.

Beyond the economic (or rational) factors of value, we have the individual (and highly subjective) factors, driven by emotions and things so deep in our psyche that we don’t know they are lingering there. These factors mean that the value of something will vary from person to person, time to time, and can change with fads and moods, and even personal circumstances.

We see all these factors – in combination – at play throughout the economy. For example, we deem diamonds to be valuable due to a sense of scarcity and high demand, but underlying this are the marketing messages telling us that the price we pay is worth it for the aesthetic beauty and durability. This is entirely a social construct, that has only been in place for around a century.

When we consider the value of anything, we need to keep these factors in mind. Things have and hold value because of the belief system we call the economy. The value of anything is intrinsically linked to the survival and continued functioning of an economy. Without it, most of the things we value have no value at all.