Principles of Economics by Carl Menger Chapter 3.1 - The Theory of Value

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What gives something value? Is it usefulness, rarity, or something else entirely? In this video, we explore The Theory of Value through the insights of Carl Menger and Austrian Economics. You’ll discover that value doesn’t come from the good itself—it comes from human needs and the awareness of scarcity.
A good becomes valuable when people recognize they depend on it to meet their needs—and when there’s not enough to satisfy everyone. If a resource is abundant, like air or river water, it may be useful but holds no value. Why? Because losing some of it doesn’t impact anyone’s well-being. But when supply drops below demand, every unit suddenly matters. That’s when value appears.
We’ll also clear up a common confusion in economics: usefulness or utility is not the same as value. Many goods are useful, but only scarce goods are truly valuable. This distinction is key to understanding how people act in markets and daily life.
Value isn’t fixed, objective, or inherent in goods—it exists only in the minds of individuals based on their situation. When needs change or supply shifts, value can appear or disappear overnight.
If you’ve ever wondered why some things are priceless in one situation and worthless in another, or why economists talk about “subjective value,” this video will give you clear answers.

Questions Answered in This Content
-What is value in economic terms?
-How does scarcity create value?
-Why don’t abundant goods have value?
-What’s the difference between usefulness or utility and value?
-Can value change over time or place?
-Why is value considered subjective in Austrian Economics?
-How does awareness of scarcity influence human behavior?
-Why do some economists confuse use value and exchange value?
-Does value exist independently of human judgment?
-How can people assign imaginary value to useless things?

00:00 - Introduction to the Theory of Value
00:11 - Economic Activity and Value
00:52 - Scarcity and Value
01:41 - Water as Economic Good or Non-Economic Good
02:24 - Usefulness or utility vs. Value
03:01 - The Relationship Between Goods and Needs
03:47 - Conclusion

#TheoryOfValue #SubjectiveValue #AustrianEconomics