What economic principle states that value is created by the expectation of future benefits?

The principle that states value is created by the expectation of future benefits is known as anticipation. This economic principle underscores the idea that the potential future income or benefit derived from a property influences its current value. For instance, if an investor expects that a property will generate significant income in the coming years, the anticipation of these future earnings enhances the perceived value of that property today.

Understanding this principle is crucial in appraisal practices as it affects how properties are evaluated, especially in contexts like investments, development projects, or locations expected to undergo growth. In contrast, the other principles listed do not encapsulate this idea of future benefit directly. Substitution relates to the worth of a property being determined by the cost of acquiring an equivalent substitute. Competition deals with market dynamics influencing supply and pricing, while supply directly involves the availability of property in relation to demand. None of these principles directly encapsulate the focus on future expected benefits as strongly as the principle of anticipation.