Imputation

Abstract

‘Imputation’ is a term introduced into economics as Zurechnung by the Austrian School economist Friedrich Freiherr von Wieser (1889). The term was a legal one, and the analogy was based on the legal method by which the jurist imputes guilt or liability to one or another criminal or tortfeasor. Imputation was a central concern of the Austrian School, since its analysis centred on the nature of the means–ends relationship (Mises 1949) and on the process by which the subjective valuations and value-preferences of individual consumers ‘impute’ value to the goods being produced. As Carl Menger, founder of the Austrian School, pointed out, the valuations by consumers of their satisfactions, or ends, impute values to the consumer goods, the means, that are expected to satisfy those wants (Menger 1871). And since producers’ goods are only means to the production and sale of consumer goods, the values of the factors of production will in turn be determined by and be equal to the expected values of the consumer goods to the consumers. In short, values are ‘imputed’ back to the prices of the factors of production; the rents of Champagne land are high because the consumers value the champagne highly, and not the other way round. ‘Costs’ of resources are reflections of the value of products forgone.