I agree it is entirely subjective and personal, and that is the hard part. What I value now (subjectively) may not be what i value in the future (subjectively) which makes the decision hard. Additionally, as someone who tries to look at things objectively or rationally there is a desire to have some numeric value that i can use to help make a decision.

Those two are generally at odds, and that is where i feel most people have problems with this decision.

I have less trouble with the decision of when you use points. As echoed by other here, I feel I either found a good deal (CPM wise) or not using cash is more important. Where the real trouble i find is on the earning side (eg, credit card spend or bonus mile promotions). With so many options we all have a desire for an objective measure to decide the value of each currency. Would i rather earn 1 UR, 1 MR, 1 SPG, 2% cash for this purchase and it becomes more complicated when you bring in bonuses categories and a desire for either concentration or diversification.

Sure, one could say they desire hotel rewards more than air or cash, but even then they need a yard stick between different programs. What I value is likely not what you value so our measures are going to be different, and that is the personal conflict.

On the redemption side, I use the cash price. I do not believe you can ignore the cash price set by the market no matter how stupid it is. I'll generally use the lower of the equivalent cash price in my calc (e.g. the lowest business class fare to my destination even if that in not on the carrier the award is on) that way it is a more objective valuation (I also will exclude the C fare as that is not realistic). I am not a big fan of the subjective approach of "how much of a premium" i would put on the economy fare (adds too much subjectivity) and is not actually achievable in the real world.

For example, I'll sit in Y on a transcon/Hawaii if the price is right. It's not that bad. But i likely will not sit in Y on any ~7+ hour flight. There about is my line. As a result, the cash price becomes relevant.

Obviously, each person has to decide what they value.