Economic subjectivism is the theory that value is a feature of the appraiser and not of the thing being valued. That is, things do not have inherent value, but have value only insofar as people desire them.
Subjective value theory was developed in the late 19th century as an attempt to overcome the shortcomings of classical economics. The most influential value theorists were members of the Austrian School of economics such as Carl Menger and Eugen von Boehm-Bawerk.
Those who endorse subjective value theory (including mainstream modern economists) believe it is a refutation of intrincisist value theories, such as the labor theory of value, which is a cornerstone of Marxism. Behavioral economics theorists explicitly seek to research and model how subjective framing of decisions affects the value an individual places on goods and outcomes.
The theory can be illustrated as follows: Imagine you are very hungry before dinner and see a piece of candy sitting on the kitchen counter. The candy seems very desirable to you, but you forbear on the candy, and wait for dinner. Dinner is very good and you end up stuffing yourself on three helpings. Afterwards, you again see the candy sitting on the counter but now you have no desire whatsoever to eat it because you are so full. The candy went from being of value, to being of no value, even though the candy has not changed. But you have changed, illustrating that the value of the candy is a property of you, not of the candy. If one accepts absolute intrincisim, then the change in the value of an unchanging piece of candy represents a paradox. If, on the other hand, a thing's intrinsic attributes influence but do not determine its value, the changes in value according to changing circumstances present no surprise to the observer.
This argument is rejected by opponents of economic subjectivism, who claim that the determining factor in the value of the candy bar as being the amount of labour or effort that went into producing it. They believe that the candy bar would still cost the same in the local store, whether you were hungry or not, and that therefore its value is unchanged. According to this view, values would only depart from intrinsic values on a temporary basis.
Economic subjectivists point out, however, that price is not the same as value, but an outcome of the interaction between supply and demand.
- Excerpts from Austrian Economists on the Subjective theory of value (http://mason.gmu.edu/~tlidderd/menger/aus_1_1.html)