The economics and psychology of value, By Osmund Agbo

A detailed pal of mine just lately commemorated his birthday, and as a real epicurean, he sought to mark the event with an unforgettable gastronomic expertise. Naturally, we, his mates, took it upon ourselves to make that occur. Somebody within the group advisable a restaurant that was supposedly price each mile, each minute, and each chunk. It was a little bit of a drive, however when the promise of nice meals is on the desk, what’s slightly inconvenience?

So, we braved Houston’s notorious site visitors, two grueling hours of stop-and-go congestion, all in pursuit of what we imagined could be a culinary masterpiece. After we lastly arrived, we had been met with a sight that was each reassuring and unnerving: a line of keen diners stretching a number of blocks. Clearly, this place had a status. Fortunately, we had the foresight to make a reservation, sparing us the agony of ready whereas our stomachs growled in protest.

Inside, the environment buzzed with vitality, the air thick with anticipation. The employees moved with a practiced grace, balancing heat and effectivity, making us really feel like we had stepped into one thing particular. After which, the meals arrived. To our disappointment, it was “simply okay”. Not dangerous, not nice — simply unremarkably common. The sort of meal you might discover at dozens of different locations with out the lengthy drive, the hype, or the inflated price ticket. But, outdoors, the road of individuals keen to attend hours for this similar expertise continued to develop.

As I sat there, I couldn’t shake a nagging thought: If one other restaurant, similar in design, menu, and repair, had been to open subsequent door underneath a special title, wouldn’t it obtain the identical success? However  I already knew the reply. This wasn’t simply concerning the meals. The proprietor had masterfully leveraged the attract of exclusivity and the ability of branding to craft a compelling narrative, one which drew a whole bunch of patrons to his door every day, keen to attend in line and keen to overpay.

Repeatedly, we see merchandise ascend to huge success, prompting rivals to develop near-identical and even superior options, usually at a lower cost. But, these newcomers battle to achieve traction, leaving their creators perplexed as to why their seemingly higher choices fail to seize the market. Whereas it might not be troublesome to copy the Chef-Proprietor’s enterprise, nobody can really replicate his distinctive story in a manner that compels patrons to attend hours only for the expertise. Because it seems, worth isn’t at all times about high quality. Extra usually, it’s concerning the story we inform ourselves and the one we lengthy to be a part of.

The Italian artist Salvatore Garau, made headlines in 2021 when he auctioned an “immaterial sculpture” titled Io Sono (which interprets to “I Am”) for $18,000. The sculpture is invisible, which means it doesn’t bodily exist in a conventional sense. As a substitute, Garau describes it as a vacuum of vitality that takes form within the thoughts of the viewer.

Io Sono exists solely conceptually, with no bodily type, not even a clean canvas or an empty pedestal. It was auctioned by Artwork-Ceremony, and the client acquired a certificates of authenticity as proof of possession. Garau specified that Io Sono should be displayed in a 5×5-foot empty house, freed from any obstructions. He argued that the art work is actual, even when intangible, as a result of “it consists of vitality, and vitality exists.”

Although many critics scoff on the notion of paying for an invisible sculpture, Io Sono is just not an remoted case. Conceptual artwork has lengthy embraced the concept that which means can exist past materiality. Artists like Marcel Duchamp, who famously offered a urinal as artwork (Fountain, 1917), and Yves Klein, who bought invisible “zones of immaterial pictorial sensibility” within the Nineteen Fifties, have pushed related boundaries.

This raises an vital query: if artwork has no tangible presence, what, precisely, is being bought? The reply lies within the conceptual nature of the art work. Garau argues that Io Sono consists of vitality and thought, present within the creativeness relatively than in bodily type. On this manner, the art work challenges conventional notions of what constitutes artwork, shifting focus from the item itself to the concept behind it.

These examples underscore a elementary fact: persons are usually extra keen to spend cash to fulfill emotional and social wants relatively than purely sensible ones. The worth of an object or expertise isn’t just in what it’s however in what it represents—and in the end, that worth is set collectively. This phenomenon extends past on a regular basis shopper conduct into the world of excessive vogue and artwork. 

In a world the place materials items usually symbolize standing, exclusivity, and private expression, it isn’t unusual to see girls in center revenue bracket, spend giant sums on high-end designer luggage, even when practically similar options exist at a fraction of the value. Equally, within the artwork world, the idea of worth can generally detach itself completely from physicality, as demonstrated by Garau’s Io Sono.

The choice to buy a $3000 designer purse as a substitute of a $50 off-brand model made of comparable supplies is just not merely about perform—it’s about what the acquisition represents. Excessive-end vogue manufacturers have mastered the artwork of perceived worth, reworking their merchandise into standing symbols that talk wealth, exclusivity, and class. Luxurious objects supply extra than simply craftsmanship; they supply an expertise, an emotional connection, and a way of belonging to an elite class.

Advertising performs a vital position on this phenomenon. Designer manufacturers make investments closely in crafting a story that associates their merchandise with status, desirability, and inventive excellence. Restricted-edition releases, superstar endorsements, and strategic placements in high-end retail areas all contribute to the phantasm that these things maintain inherent worth past their materials price. Customers, in flip, don’t merely purchase a bag, they purchase into the model’s legacy, its status, and the cultural capital that comes with proudly owning an object of need.

Furthermore, there’s a psychological dimension to those purchases. Behavioral economics suggests that folks derive satisfaction not simply from the product itself however from the social recognition that comes with it. Proudly owning a designer purse is a symbolic act, one which signifies monetary success and a refined style, very similar to eating in an costly restaurant just like the one we visited.

The query of worth is central to this dialogue. In classical economics, worth is commonly derived from utility, labor, and shortage. Nonetheless, in each luxurious vogue and conceptual artwork, worth is basically subjective. It’s decided not by intrinsic price however by cultural context, branding, and the willingness of others to acknowledge and affirm that worth. 

A designer purse is efficacious as a result of society collectively agrees it’s fascinating. Equally, an invisible sculpture is price $18,000 as a result of the artwork world validates its conceptual advantage.

Possession, too, takes on a brand new dimension in these circumstances. Conventional possession is related to bodily possession, however conceptual artwork and luxurious branding complicate this notion. The customer of Io Sono owns nothing tangible, but they maintain a legit declare to an concept. Likewise, a luxurious purse proprietor might derive extra worth from the symbolic possession of a standing merchandise than from the item’s sensible use.

Whether or not in luxurious vogue or conceptual artwork, worth is commonly a social assemble, decided not by materiality however by collective settlement and cultural validation. The attract of possession extends past possession, tapping into the human want for identification, standing, and which means. On this manner, Garau’s Io Sono and a designer purse aren’t so completely different in any case—they’re each testaments to the advanced and infrequently irrational nature of human valuation.

Osmund Agbo is a US-based medical physician and creator. His works embody Black Grit, White Knuckles: The Philosophy of Black Renaissance and a fiction work titled The Velvet Court docket: Courtesan Chronicles. His newest works, Pray, Let the Shaman Die and Ma’am, I Do Not Come to You for Love, have simply been launched.