But utility also seems to depend on expectations regarding the future. The guy with $500 doesn't worry about losing $1 if he anticipates having a steady stream of dollars coming in the near future. Yet if he suspects a loss trend is starting, he'll get defensive about his wallet right away and not wait until he is down to his last $20. So $1 has more utility to a bear than to a bull.
The utility of $1 in stocks may also differ from that of $1 in cash. Stocks go through huge price swings triggered by small changes in the balance sheet. A firm that loses an amount representing 1% of its current liquid assets often sees its share price drop by a third as investors cash out. Or the other way around, if the company has earnings.
Future expectation is so powerful that Google will pay a startup $1 billion for an app that hasn't even made any money yet. In general, utility seems useful only as a conceptual tool for economics teachers as it's actually not measurable under most circumstances. Perhaps the speculative bubbles in my nightly bubble bath are made of utility, I dunno.
The utility of $1 in stocks may also differ from that of $1 in cash. Stocks go through huge price swings triggered by small changes in the balance sheet. A firm that loses an amount representing 1% of its current liquid assets often sees its share price drop by a third as investors cash out. Or the other way around, if the company has earnings.
Future expectation is so powerful that Google will pay a startup $1 billion for an app that hasn't even made any money yet. In general, utility seems useful only as a conceptual tool for economics teachers as it's actually not measurable under most circumstances. Perhaps the speculative bubbles in my nightly bubble bath are made of utility, I dunno.
