Fun Illustration of Subjective Value and the Free Market

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Jalopnik has a story about a 17 year old who acquired a free Porsche Boxter. It took him two years, constant monitoring of Craigslist barter ads, and all started when a friend gave him a cell phone:

Starting with an old cell phone that was given to him for free by a friend, Steven [Ortiz] used the “barter” section of Craigslist to move up to a better phone. He then traded the phone for an iPod Touch, the iPod Touch for a dirtbike — which was turned around several times for other, better dirtbikes — and then a MacBook Pro arrived, which opened the door to vehicles.

…The total number of trade transactions between old cell phone and Porsche Boxster? Fourteen.

Barter gives nice clean illustrations of subjective value. This example is an extreme, but it shows that every voluntary trade must involve differing value scales between the two individuals. Steven had a cell phone (an iPhone that he was using to watch Craigslist), so he could easily part with the free phone from his friend and the other intermediate phones. The people who wanted the other intermediate phones also had their own motives and value scale. From their own perspective at the time, both parties benefited during each trade, regardless of what the outside observer thinks. Indeed, it’s interesting to see how the classic car enthusiasts who write for Jalopnik view Steven’s final trade:

The MacBook Pro was traded for a Toyota 4Runner…ending up with a sweet 1975 Ford Bronco.

Had we been Steven, we’d probably have stopped there, as it doesn’t get much better than an old Ford Bronco. However, by the time he acquired the Bronco he was of driving age. After enjoying it for a while, he decided to mix things up and go for a Porsche.

3:55 pm on January 19, 2013