If/Then

Is Money Really the Best Measure of Value? With Mohammad Akbarpour

Apr 3, 2024

Stanford economics professor Mohammad Akbarpour challenges the conventional view that money is an objective measure of value. He argues that people value money differently based on their circumstances. By considering money's subjectivity, we can design more equitable markets that maximize value and welfare for more people.

25:00

Episode guests

Mohammad Akbarpour

AI Summary

AI Chapters

Episode notes

Podcast summary created with Snipd AI

Quick takeaways

People value money differently based on personal circumstances and financial status.

Market distortions can be justified to achieve better outcomes and fairness in economic markets.

Deep dives

Uber Driver's Perspective on Flexibility and Safety

Uber driver Aziz from Chicago values the control and choice working for Uber provides him, allowing him to decide when and where to drive and which rides to accept. With over 20,000 Uber trips, he appreciates the safety and flexibility compared to traditional taxi services, highlighting how incentives like surge pricing impact his earnings and choices.

Intro

2min

Market Dynamics and Resource Allocation in the Ride-Sharing Economy

12min

Exploring Interpersonal Utility Comparisons and Wealth Redistribution in Economics

4min

Addressing Inequality through Market Mechanisms for Essential Goods

3min

Exploring Fairness in Markets and Interpersonal Utility Comparison

4min

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:

People value money differently: People have different subjective valuations of money based on their own circumstances and financial well-being. $100 means something much different to the CEO of a large, successful corporation than it does to a family on the brink of eviction.
Market distortions can be warranted: For some goods and services, price controls or subsidies can be more efficient than a free market at allocating resources and benefiting those with less wealth.
Real-world application: From ridesharing to concert tickets, Akbarpour shares how theoretical economics can be applied to address inequality and improve society.

More Resources:

Mohammad Akbarpour

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:

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.