Preferences differ, sometimes dramatically, between individuals. How much is a ticket to see a performance of the Bolshoi Ballet worth? Some people would be willing to pay a very high price, while others might prefer to stay home, even if tickets were free! Circumstances can change from day to day, even for a given individual. Alice, a ballet fan who usually would value the ticket at more than its price of $100, is invited to a party and suddenly becomes uninterested in attending the ballet. Now what is the ticket worth? If she knows a friend who would give her $40 for the ticket, it is worth at least that much. If she advertises the ticket on eBay and gets $60 for it, a higher value is created. But if someone who doesn’t know of the ticket would have been willing to pay even more, then a potential trade creating even more value is missed. If that particular performance is sold out, perhaps someone in town would be willing to pay $120. One thing is certain: The value of the ticket depends on several things, including who uses it and under what circumstances.
Economics recognizes that people can and do value goods differently. Mike may prefer to have a grass field rather than a parking lot next to his workplace and be willing to bear the cost of walking farther from his car each day. Kim, on the other hand, may prefer the parking lot and the shorter walk. As a science, economics does not place any inherent moral judgment or value on one person’s preferences over another’s-in economics all individuals’ preferences are counted equally. Because the subjective preferences of individuals differ, it is difficult for one person to know how much another will value an item. Think about how hard it is to know what would make a good gift for even a close friend or family member. Thus, arranging trades, or otherwise moving items to higher valued users and uses, is not a simple task. The entrepreneurial individual, who knows how to locate the right buyers and arranges for goods to flow to their highest valued use, can sometimes create huge increases in value from existing resources. In fact, people moving goods toward those who value them most and combining resources into goods that individuals value more highly is a primary source of economic progress.

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