Want an Econ Nobel? Finish this for me
Ronald Loui
Ronald Loui
Ronald Loui
Published May 27, 2026
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Everyone knows the mathematical measurement of value as a single number is a bad model.

It's like temperature. It's so 18thC. Surely a better data structure is out there. OK, but where?

Do I like multidimensional approaches to utility? Yes, I do. Do I like process models? I do. Do I think mean-risk and other ways of taking into account lottery accumulation, or fair outcomes, are good steps away from simple Eu maximization? Yes and yes and yes.

So where are my new ideas on accounting for value, you ask? If we aren't in gambling halls taking expectations, what do you have in mind?

Well, just sketches of ideas. Not even that. Just places to look.

Start with one of my favorites. I wrote to Nobel winner Thaler about this (no reply, but he's still my favorite living Econ NobW, fellow UoR and CWRU guy, though his stint at UChi was clearly better than my time at WashU -- probably inspired every day by what was going on in the official Econ dept!).

I say Bill Gates cannot get the massage I can get. You believe it? AI Chat will happily explain it if you don't. Do a little work on yourself and you'll see.

It's not so much that Bill is a few years older, or even richer, a lot richer, a lot lot lot lot richer. It's about what kind of person you are. You get certain things in life if you are a nice person. For free! And you can't buy them. You can't buy the smile from the pretty stranger on the street, spontaneous and authentic. You can't ask the barista to put a heart in your latte. She has to put it there because she wants to. So many people never understand this.

Often it matters as much WHY and HOW and FROM WHOM, not just what. Widgets, exchangeable and anonymous, were invented for analysing mass production industries. If you think life is about widgets, if you are convinced that value can be found in price alone, I am very sad for you.

There are a lot of sources of value that are hard to exchange, especially across people. Hard to store. Hard to price. Economists like to call it sentimental value. You see the problem already with economists.

I put value on my personal discipline, my code. Others on their religious adherence. I place value on dignity, loyalty, sustainability, virtuosity, sincerity, generosity, ingenuity, curiosity, creativity, luminosity, serenity, ... even humility believe it or not -- i just have a profession where the fight over oxygen for ideas is harsh. Hard to price all of those things. Some even value pomposity ha ha.

You can try to put them as part of your outputs on a fixed time horizon and use Savage's small worlds decision theory. But you won't because it's hard to elicit preference and assign a utility. And many of the -ity's interact with lottery embeddings, or violate substitutivity. Note I do not put inherent utility on substitutivity, but a lot of mathematical decision theorists can't seem to live without it.

I first remember talking to Fernando Tohme, our research associate from Argentina and an Econ prof, while walking around Stanford's football field mid-90s. Big field. And yes, you learn about the -ity values when you travel to a place like his Bahia Blanca. Low GDP per person, high level of happiness when the dictators and the financiers are not messing up everyone's life. A good lesson there.

But you have to eat. We know plenty of deadbeats practicing kung fu in the park in Honolulu, but the rents are high and schools are expensive.

So the idea is that the calculus of value changes at each Maslow level of needs. At a subsistence level, you need to meet a minimum. At a social signaling level, you're maximizing something. I can't say I approve of that thing you are often maximizing, usually very poorly engineered but heavily marketed cars; it does seem Monopoly had insight into the human condition at the level of social standing.

The full hierarchy: physiology, safety, belonging and love, esteem, self-actualization, transcendence, or some variation. Each gets its different math.

At the lower levels, you need to meet a minimum. As you progress, there are new dimensions, and perhaps you are maximizing in higher dimensional space. This is where standard utility maximization enters. To belong, meet the mins for the group; to love, max some mixing of joint effects. For self-actualization, it seems some minimum balance is needed. Balance to achieve max of self. For transcendence, max the balance with environment so as to min the self. Something like that. The wording is pithy but the phase change is real.

That's all I got. It needs decades of work and insight, but I think you can see it's the right idea. People have said it for aeons. Go ask your rabbi or priest or local yogi. Climb the mountain and the same answer awaits: Stop thinking materially and start working on being a better person, yes, but make sure your family eats and is safe.

I actually knew a young prof (he's not young any more) who tried to live his life as max utility man, at the mid-levels. Very effective attracting the attention of fellow homo economicus. Not so great valuing the hearts in lattes i suspect. Nice guy, wrong calculus. He did eat well, I must concede.