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What We Teach

How we teach Subjective Value in YE

In Youth Entrepreneurs, students learn how to use economic thinking to solve entrepreneurial problems. Students explore this framework for economic problem-solving through what we call the “4 S’s,” which are Scarcity, Self Interest, Subjective Value and Sunk Cost. Here we explore the idea of Subjective Value. 

“People value different things, at different times, for different reasons, and it’s always changing,” says Matt Farag, National Training Specialist for Youth Entrepreneurs. “Subjective value plays a big role in the 4 S’s in that you can’t create value if you don’t know what other people value.” 

Many students believe that people value the same things, but Matt describes that as false logic. In the YE classroom, students learn different approaches to creating value for the people they’re trying to reach.

“Trade happens between individuals,” Matt says. “For one person something might be a rip-off and for another a great deal.”

As a training specialist, Matt trains YE teachers in preparation for their time in the classroom. He encourages them to give concrete examples of the principle of subjective value by guiding students in exploring what is valuable to them, and seeing that it might not be valuable to their classmates. For example, one person might like to spend a lot of money on a nice pair of jeans, whereas another doesn’t find that worth their money and prefers to buy clothes at a discount store.

What takes this lesson a step further is realizing that value is not only different from person to person, but from moment to moment. 

“That’s the ‘it’s always changing’ part of the definition of subjective value,” Matt says. “I may want a snack after work, but if you offer me a second one, I may no longer want it. The value changed instantly. It can change from hour to hour, not just from person to person.” 

There are many activities in the YE classroom that exemplify this. One favorite is the Candy Bar activity. The teacher offers an incentive, such as classroom currency, for a student to eat a bite-sized candy bar. Then, they offer the same incentive to eat the same candy bar. By the time the student has eaten 10 candy bars, the value has lowered — they’re full, no longer interested in candy bars, even if they’re getting paid. 

Other classroom activities that teach subjective value include Disruptus, Market Day and Classroom Auctions. As students learn that value is always changing, they discover how to create products and incentives that will connect with a variety of customers. Market Day is an all encompassing application of this lesson. 

As students learn that value is always changing, they discover how to create products and incentives that will connect with a variety of customers.

“Once you have these concepts, you can apply them in a real world situation,” Matt explains. “With Market Day, students are trying to figure out what their fellow students are interested in at a certain time. We have them do market research. They may be asking about something as simple as what type of pizza students like, but what they’ll find is that customers have different values, and in order to truly make a profit, we should really listen to our customer.” 

Using classroom currency in an auction is also a very eye-opening activity for students. During auctions, students bid on what is valuable to them, and see instant results of the differences in value to different people.

As students come to understand subjective value in the classroom, they learn life-long lessons that apply outside of the classroom as well. 

“Students feel like they need to follow the crowd,” Matt says. “But understanding subjective value helps them realize that not everything applies to them. They may not enjoy the same college or major or profession in the way others do. We value things differently and it changes, and this lesson can give them the confidence to do something differently.”

Read more about YE’s economic principles on the blog