An excerpt from Noah Smith’s post, Markets in Almost Nothing:

One of the first things I noticed when I started studying economics was that goods that can’t be bought and sold are basically ignored. That might be fine for determining prices of stuff (especially if people have quasilinear utility), but when you have massively incomplete markets, the basic big results of first-year microeconomics – the welfare theorems – go totally out the window. In addition, to get comprehensible results for the prices and quantities of exchange-able goods, you need to make a lot of heroic assumptions about the non-exchange-able goods – in other words, when people spend most of their time working for things that money can’t buy, their behavior toward the things that money can buy gets a lot more complicated.

And when I think about it, I realize that people do spend much of their time working for things that they can’t possibly buy. Here are some examples of things that can’t be purchased in any market, even with one hundred billion dollars or a million tons of gold:

* Love

* The respect of your peers

* A feeling of career “success”

* The ability to fit in with other human beings

* Close friends

* Your family being proud of how your life turned out

* The feeling of being good at what you do

* Dignity

There are many more examples. It’s not a question of whether these things should or shouldn’t be traded in markets. It’s simply that they cannot be.