Not what something costs to make. Not even what it’s worth in general. What it’s worth to the specific person who has, or doesn’t yet have, one more unit of it.
Before the 1870s, mainstream economics largely explained value through cost or labour inputs. William Jevons, Carl Menger, and Léon Walras independently developed marginal utility theory at almost the same time: value comes from the satisfaction a good provides to a particular person at the margin — the next unit, not the average of all units — which is why a starving person’s first loaf of bread is worth vastly more to them than a tenth loaf is to someone already full.
“Highest utility” as an allocation principle applies this directly: it means directing a resource toward whoever gets the most actual benefit from it next, not toward whoever can pay the most or holds the strongest formal claim — a materially different allocation rule than price alone would produce.
Source: Moscati, I., Measuring Utility: From the Marginal Revolution to Behavioral Economics, Oxford University Press, 2019.