I’m an economist. I’m studying at GMU, a university known for carrying on the Austrian tradition. While all economists recognize subjectivism, variously understood, I’ve talked about how Austrians are particularly extreme subjectivists and dubious of objective value. This article presents a simple economic argument for objective value.
A recent Leeson class was typical. A discussion of marriage rose central to a discussion on the family. Much of the class seemed perplexed about the demand for marriage despite various alternatives, but it seemed obvious to me that religion was the cause. The existence of religion, in turn, seemed to perplex many in the class. How could a bunch of lies be efficient? Isn’t truth efficient? Creative theories were put forth but the obvious argument was danced around like a pink elephant.
Thus, my obvious argument for the durability of religion, from which the durability of marriage follows, and which is trivially turned into a general argument for objective value:
- Truth is durable and efficient
- Christianity is true
- Therefore, Christianity (and Christian marriage) are durable and efficient
A weaker form:
- Credibility has value
- Some religions with positive credibility exist
- Therefore, some religions have value
The key here is that truth is objective. Credibility, a weaker metric, is subjective, but it is a function of truth. Therefore, it is in part objectively determined. If we see credibility as a product and truth as one of the factors of production, the value attributed to truth as an input may be called objective value. Interestingly, technology may be considered a gain to true knowledge, which in turn provides a measure of the value of truth. This highlights a point about search theory which I have long emphasized: The content of the information produced is important. Large quantities of information may not be beneficial is the information is systematically false. True information has positive value. The fact that people spend so much on search in order to obtain truth shows, as a third example, the value of truth.
Here is an article I did to empirically establish the theoretically obvious claim that a change to the information stock of an individual may explains shifts in willingness to pay.
I do believe in objective value writ large. What I mean by that is that I believe the efficient society is allocated and operates according to the will of God. I argue against theocracy, but toward a polycentric legal system coupled with a Christian culture. Under this view, objective moral values* may be seen as beneficial institutions or moral capital, and a straightforward prediction is that societies rich in such capital are expected correlate with higher real productivity and utilitarian social surplus. I see evidence for this which I won’t thoroughly review, but it is worth noting that at the macro level many associate western development with the institution of Christianity, and at the micro level we see people who attend church are markedly more satisfied with their lives.
*Such as the suppression of adultery, murder, and thievery, as well as the support of love, truth, and charity, among much else.
Because the broader set of claims just identified are difficult to concisely review, test, and validate, this article concerns a small subset of two kinds of objective value. Real or nominal prices are objective measures of value. Two kinds of objective value are:
- The value of truth
- Equilibrium values
Three approaches to the estimation of the value of truth were previously suggested:
- Demand for religious services
- A positive analysis could take various scriptures and count the number or density of true, false, and unverifiable claims, or some combination of those and other factors, and attempt to output demand. This would be a straightforward regression of value on estimated truth.
- Alternatively, we could measure demand as a function of credibility, where credibility in turn is taken as a function of truth. Credibility could be measured by survey.
- Demand for search
- The value of technology
- Willingness to pay for new technology, eg R&D investment
- The revenue product of technology. Marginal revenue product would give you the economic value of some particular set of statements, those true claims which constitute the delta between the old technology and the new technology, where a technology is a set of knowledge, and knowledge is a known true claim. Total revenue product would give you the economic value of a very large set of knowledge, but this is ultimately still an objective value of truth.
Notice that ultimately all production depends on some technology. Consequently, all production is ultimately dependent on truth and all value is in some sense objective. This is my counter to those who would say all value is ultimately subjective:
- It is not ultimately subjective because subjective evaluation depends on prior or contemporaneous objective truth.
- If it is ultimately subjective, it is simultaneously ultimately objective. It is ultimately and irreducibly both. One deserves no more attention than the other.
- Similarly, in empirical work they both matter. Technical productivity is a real I/O measure and thereby objective, but market research on people’s expectations, opinions, and willingness to pay matter equally. There really is no sense in which running a business doesn’t need both considerations.
- Some evidence suggests that free will is an illusion and the world is entirely deterministic. Supposing free will exists it may be pinched, squeezed, or rigged, such that in the long run the world turns out to be deterministic. In either case the world is to some degree, perhaps mainly in the long run, open to objective evaluation.
Related articles discussing objective value:
- Some Cool AEA Papers (February 2014)
- Arguing for Intrinsic, Objective Value and Moral Markets (July 2013)
- Calling Didier’s Economic Bluff (June 2013)
- God’s Will as Objective Utility and Interpretive Proof (June 2013)
- What is Caeconomics? (June 2013)