The economics and psychology of value, By Osmund Agbo

Whether in luxury fashion or conceptual art, value is often a social construct, determined not by materiality but by collective agreement and cultural validation. The allure of ownership extends beyond possession, tapping into the human need for identity, status, and meaning. In this way, Garau’s Io Sono and a designer handbag are not so different after all — they are both testaments to the complex and often irrational nature of human valuation.

A close friend of mine recently commemorated his birthday, and as a true epicurean, he sought to mark the occasion with an unforgettable gastronomic experience. Naturally, we, his friends, took it upon ourselves to make that happen. Someone in the group recommended a restaurant that was supposedly worth every mile, every minute, and every bite. It was a bit of a drive, but when the promise of great food is on the table, what’s a little inconvenience?

So, we braved Houston’s infamous traffic, two grueling hours of stop-and-go congestion, all in pursuit of what we imagined would be a culinary masterpiece. When we finally arrived, we were met with a sight that was both reassuring and unnerving: a line of eager diners stretching several blocks. Clearly, this place had a reputation. Thankfully, we had the foresight to make a reservation, sparing us the agony of waiting while our stomachs growled in protest.

Inside, the atmosphere buzzed with energy, the air thick with anticipation. The staff moved with a practiced grace, balancing warmth and efficiency, making us feel like we had stepped into something special. And then, the food arrived. To our disappointment, it was “just okay”. Not bad, not great — just unremarkably average. The kind of meal you could find at dozens of other places without the long drive, the hype, or the inflated price tag. Yet, outside, the line of people willing to wait hours for this same experience continued to grow.

As I sat there, I couldn’t shake a nagging thought: If another restaurant, identical in design, menu, and service, were to open next door under a different name, would it achieve the same success? But  I already knew the answer. This wasn’t just about the food. The owner had masterfully leveraged the allure of exclusivity and the power of branding to craft a compelling narrative, one that drew hundreds of patrons to his door each day, eager to wait in line and willing to overpay.

Time and again, we see products ascend to massive success, prompting competitors to develop near-identical or even superior alternatives, often at a lower price. Yet, these newcomers struggle to gain traction, leaving their creators perplexed about why their seemingly better offerings fail to capture the market. While it may not be difficult to replicate the Chef-Owner’s business, no one can truly replicate his unique story in a way that compels patrons to wait hours just for the experience. As it turns out, value isn’t always about quality. More often, it’s about the story we tell ourselves and the one we long to be part of.

The Italian artist, Salvatore Garau, made headlines in 2021 when he auctioned an “immaterial sculpture” titled “Io Sono” (which translates to “I Am”) for $18,000. The sculpture is invisible, meaning it doesn’t physically exist in a traditional sense. Instead, Garau describes it as a vacuum of energy that takes shape in the mind of the viewer.

Io Sono exists only conceptually, with no physical form, not even a blank canvas or an empty pedestal. It was auctioned by Art-Rite, and the buyer received a certificate of authenticity as proof of ownership. Garau specified that Io Sono must be displayed in a 5×5-foot empty space, free of any obstructions. He argued that the artwork is real, even if intangible, because “it consists of energy, and energy exists.”

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Though many critics scoff at the notion of paying for an invisible sculpture, Io Sono is not an isolated case. Conceptual art has long embraced the idea that meaning can exist beyond materiality. Artists like Marcel Duchamp, who famously presented a urinal as art (Fountain, 1917), and Yves Klein, who sold invisible “zones of immaterial pictorial sensibility” in the 1950s, have pushed similar boundaries.

This raises an important question: if art has no tangible presence, what, exactly, is being purchased? The answer lies in the conceptual nature of the artwork. Garau argues that Io Sono consists of energy and thought, existing in the imagination rather than in physical form. In this way, the artwork challenges traditional notions of what constitutes art, shifting focus from the object itself to the idea behind it.

These examples underscore a fundamental truth: people are often more willing to spend money to satisfy emotional and social needs rather than purely practical ones. The value of an object or experience is not just in what it is but in what it represents — and ultimately, that value is determined collectively. This phenomenon extends beyond everyday consumer behaviour into the world of high fashion and art. 

In a world where material goods often symbolise status, exclusivity, and personal expression, it is not uncommon to see women in middle income bracket, spend large sums on high-end designer bags, even when nearly identical alternatives exist at a fraction of the price. Similarly, in the art world, the concept of value can sometimes detach itself entirely from physicality, as demonstrated by Garau’s Io Sono.

The decision to purchase a $3,000 designer handbag instead of a $50 off-brand version made of similar materials is not merely about function — it is about what the purchase represents. High-end fashion brands have mastered the art of perceived value, transforming their products into status symbols that communicate wealth, exclusivity, and sophistication. Luxury items offer more than just craftsmanship; they provide an experience, an emotional connection, and a sense of belonging to an elite class.

Marketing plays a crucial role in this phenomenon. Designer brands invest heavily in crafting a narrative that associates their products with prestige, desirability, and artistic excellence. Limited-edition releases, celebrity endorsements, and strategic placements in high-end retail locations all contribute to the illusion that these items hold inherent value beyond their material worth. Consumers, in turn, do not simply buy a bag, they buy into the brand’s legacy, its reputation, and the cultural capital that comes with owning an object of desire.

Moreover, there is a psychological dimension to these purchases. Behavioural economics suggests that people derive satisfaction not just from the product itself but from the social recognition that comes with it. Owning a designer handbag is a symbolic act, one that signifies financial success and a refined taste, much like dining in an expensive restaurant like the one we visited.

The question of value is central to this discussion. In classical economics, value is often derived from utility, labour, and scarcity. However, in both luxury fashion and conceptual art, value is largely subjective. It is determined not by intrinsic worth but by cultural context, branding, and the willingness of others to recognise and affirm that value. 

A designer handbag is valuable because society collectively agrees it is desirable. Similarly, an invisible sculpture is worth $18,000 because the art world validates its conceptual merit.

Ownership, too, takes on a new dimension in these cases. Traditional ownership is associated with physical possession, but conceptual art and luxury branding complicate this notion. The buyer of Io Sono owns nothing tangible, yet they hold a legitimate claim to an idea. Likewise, a luxury handbag owner may derive more value from the symbolic ownership of a status item than from the object’s practical use.

Whether in luxury fashion or conceptual art, value is often a social construct, determined not by materiality but by collective agreement and cultural validation. The allure of ownership extends beyond possession, tapping into the human need for identity, status, and meaning. In this way, Garau’s Io Sono and a designer handbag are not so different after all — they are both testaments to the complex and often irrational nature of human valuation.

Osmund Agbo is a US-based medical doctor and author. His works include Black Grit, White Knuckles: The Philosophy of Black Renaissance and a fiction work titled The Velvet Court: Courtesan Chronicles. His latest works, Pray, Let the Shaman Die and Ma’am, I Do Not Come to You for Love, have just been released.