Chapter two of Saifedean's Principles of Economics builds upon the premise established in the initial chapter - the fundamental unit of economics is human action, the decisions we make in the marketplace. A multitude of terms are introduced, all with reference to this core concept.

Central to this chapter is the notion of value. Saifedean persuasively argues that value is a subjective construct; individuals assign value based on their personal needs, goals, and objectives. Yet, the reality of scarcity means that not all desires can be fulfilled, necessitating trade-offs. This is where economics comes into play, serving as the study of choices humans make when goods have a cost because they are scarce.

The valuation process varies across geographical locations, timeframes, and individuals, and even fluctuates within a single individual, especially as they accumulate more of a particular good. Saifedean emphasizes the variability of value, determined largely by our knowledge, our environment and our personal circumstances at a given moment. Thus, value cannot be objectively measured. As he points out, oil has gone from a good that people paid to get rid of, to a good that people paid a lot of money for. The properties of oil did not change, individual valuations did based on knowledge.

Saifedean identifies a common pitfall in economic thought—equating value with price. These two concepts, he argues, are distinct. A trade merely suggests that each party values what they acquire more than what they give up. While prices reflect the preferences of those involved in a trade, they don't serve as an objective measure of an item's value. He illustrates this with the enduring paradox of why diamonds are pricier than water. This question mistakenly blends the concepts of price and value. Although diamonds fetch higher prices in the market, the subjective value of diamonds versus water ultimately depends on the individual and their specific circumstances.

This chapter seems to be setting up Saifedean's approach to understanding human decision-making. He roots his understanding in fundamental principles, a stark contrast to non-Austrian methodologies, which often rely on oversimplified assumptions like the 'homo economicus' or deterministic numerical relationships. Human action is inherently varied, and this chapter compellingly argues for the recognition and understanding of this complexity and arms us with useful tools for evaluating it.