Comment by rz2k
2 years ago
The revealed preferences in this story display that for these two individuals there is at least $100 of value in viewing this spectacle, and no more than $100 distaste in performing this spectacle. Sadly GDP does not measure how much surplus value was created by these two transactions, given that maximizing utility is a better normative goal than maximizing GDP, but GDP did indeed increase by $200 and it is accurate in indicating that at least total utility was increased (less unaccounted for externalities like unfertilized trees or whatever).
> value
In this case we have two approximately equal economists, but in general any discussion about revealed preferences, utility, and value is remiss without a parallel discussion on how value is wealth-weighted. Feeding a starving orphan creates 0 economic value because the orphan has no money, but figuring out how to merge companies into a monopoly creates extreme amounts of economic value by way of making rich investors even richer.
> 0 economic value
Economic value is not only distinguished as economic measurement. This is why utility theory and revealed preference theory exist.