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I think we have to be careful that by adding “utility” as an indirection we don’t accidentally traffic in “cost”. Because maybe I am dumb but it seems to me tha

I think we have to be careful that by adding “utility” as an indirection we don’t accidentally traffic in “cost”. Because maybe I am dumb but it seems to me that the utility of a toaster is its ability to toast bread. If I make 5x as much as someone in China and am willing to pay 5x as much for the same thing, at the end of the day we both just want toast. And if I buy a crappy toaster that only costs 2x as much and can only toast half as fast, “utility” (i.e. cost) says my toaster is still better despite it being an objectively worse toaster.

chii 2y ago
> at the end of the day we both just want toast but the seller doesn't care about that. The seller will attempt to extract the maximum price of a toaster. It is because americans are more productive, that their maximum price for a toaster is 5x that of china; they can afford to pay 5x. So this is a measure of their utility - not the ability to toast. An american finds that the ability to toast to be worth 5x that a chinese would be willing to pay for toast. If america was poorer, the seller would not be able to sell the toaster for 5x (and instead would have to lower their price to match the price their customers can afford, up to the minimum margin the seller could afford to cut to).
- janalsncm 2y ago
  I think my point is about an underlying quality of the toaster, the ability to make toast, which is independent of its cost in different places. The price of a product is complicated by many factors which are irrelevant to that underlying quality.
  - chii 2y ago
    > an underlying quality of the toaster, the ability to make toast, which is independent of its cost in different places and this is called intrinsic theory of value[0], which mostly has been superceded by other theories (such as the one in my post, which is the subjective theory of value[1]). While the intrinsic theory of value isn't wrong per se, it is too naive, and "simple", such that this theory does not explain much when applied to real world scenarios. [0] https://en.wikipedia.org/wiki/Intrinsic_theory_of_value https://en.wikipedia.org/wiki/Intrinsic_theory_of_value [1] https://en.wikipedia.org/wiki/Subjective_theory_of_value https://en.wikipedia.org/wiki/Subjective_theory_of_value

chii 2y ago

> at the end of the day we both just want toast but the seller doesn't care about that. The seller will attempt to extract the maximum price of a toaster. It is because americans are more productive, that their maximum price for a toaster is 5x that of china; they can afford to pay 5x. So this is a measure of their utility - not the ability to toast. An american finds that the ability to toast to be worth 5x that a chinese would be willing to pay for toast. If america was poorer, the seller would not be able to sell the toaster for 5x (and instead would have to lower their price to match the price their customers can afford, up to the minimum margin the seller could afford to cut to).

janalsncm 2y ago
I think my point is about an underlying quality of the toaster, the ability to make toast, which is independent of its cost in different places. The price of a product is complicated by many factors which are irrelevant to that underlying quality.
- chii 2y ago
  > an underlying quality of the toaster, the ability to make toast, which is independent of its cost in different places and this is called intrinsic theory of value[0], which mostly has been superceded by other theories (such as the one in my post, which is the subjective theory of value[1]). While the intrinsic theory of value isn't wrong per se, it is too naive, and "simple", such that this theory does not explain much when applied to real world scenarios. [0] https://en.wikipedia.org/wiki/Intrinsic_theory_of_value https://en.wikipedia.org/wiki/Intrinsic_theory_of_value [1] https://en.wikipedia.org/wiki/Subjective_theory_of_value https://en.wikipedia.org/wiki/Subjective_theory_of_value