A dollar is a dollar, right? While most conventional economic theories view money as an objective store of value, Mohammad Akbarpour says this misses a subtle but important fact: different people value money differently.
Many economists assume that the price someone is willing to pay for a good or service is equivalent to the utility they get from it. But Akbarpour, an associate professor of economics at Stanford Graduate School of Business, isn’t convinced. “Different people have different marginal value for money,” he says. “If someone is willing to pay $1,000 for a Taylor Swift concert, they do not necessarily get more value [than] someone willing to pay $500. If you're willing to pay more for something, that does not mean that the social welfare is maximized for giving the good to you. It could be that you're rich.”
As Akbarpour explores on this episode of If/Then: Business, Leadership, Society, money doesn’t have to be the sole decider of how scarce resources are allocated. By considering money’s subjectivity, we can design more equitable markets that maximize value and welfare for more people.
Key Takeaways:
More Resources:
Voices profile, Mohammad Akbarpour, "In some ways, all of academia hinges on this receptiveness to having your mind changed."
Akbarpour's research in Stanford GSB Insights:
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