William Stanley Jevons belongs to the group of economists whose school of thought dominated economics for a half-century after the death of John Stuart Mill in 1873. Born in Liverpool, Jevons studied mathematics, biology, chemistry, and metallurgy. His personal interests stretched ever wider to include astronomy, psychology, and, of course, economics.

We know from Jevons's correspondence that by 1860 he was working intensively in the field of economics and had isolated the central idea of his later theory: the idea that as the quantity of any commodity consumed increases, the utility or benefit derived from the last unit decreases. A paper setting forth Jevons's ideas on consumer behavior in mathematical form was ignored when presented in 1862 to the British Association for the Advancement of Science and its publication four years later attracted no more attention. But in 1871, Jevons ensured his place in the history of economic thought with his Theory of Political Economy, which based the theory of value and exchange on the principles of marginal utility.

Taking a lead from Jeremy Bentham, Jevons argued that a hedonistic calculus permits individuals to balance the utility of consumption against the disutility of labor. The price of a commodity, he argued, is not determined by its total utility, but by the utility of the last unit consumed, in relation to the sacrifice one must make to obtain that increment. Jevons was convinced that both total utility and marginal utility could be measured precisely. One skeptic suggested that Jevons thought he could measure the difference in satisfaction derived from eating plain toast versus buttered toast with marmalade. The iconoclastic Thorstein Veblen was even more scathing in his condemnation of the mechanistic approach popularized by Jevons.

The significance of Jevons's theory is that it made a permanent break with earlier attempts to relate value and prices to "objective" costs, such as wages. Jevons argued that prices and value are based (1) on subjective estimates of worth, claiming that

labor once spent has no influence on the value of any article.... In commerce bygones are forever bygones; and we are always starting clear at each moment judging the value of things with a view to future utility.

John Maynard Keynes called Jevons's book "the first modern book on economics," but it is extremely narrow in focus by present standards. It deals almost exclusively with the theory of exchange and not at all with the theory of production. Nevertheless, in the marginal principle Jevons found the linchpin of value and distribution. Prior to Jevons, economists in England focused almost exclusively on supply. Jevons's insistence on the importance of utility and scarcity caused increased emphasis on demand. In a sense, he was the minister who joined supply and demand in marriage, nevermore to be considered entirely independently.