Some Thoughts on Value
Although we all think we understand the concept of value,
it isnt nearly so simple as it seems. What is something
worth? We each have a personal answer to that question. I might
pay more than you for a particular item, or expend more time
and effort to get it. You might value something else much more
highly than myself.
It would seem that market value is an easier one to define.
It is simply what the highest bidders in the market are willing
to pay. This is psychologically difficult for many people, who
would, for example, prefer that their home was worth what they
wanted to sell it for rather than what buyers are willing to
pay, but it is intellectually easy - or so it would seem. Even
here, if we look deeper we see that there is an implicit concept
of "true market value," meaning what something would
sell for if all potential participants had all the relevant information.
For example, when my wife and I bought a home in a beautiful
town in Montana for $17,500 a few years back, I suspect that
if more buyers around the country knew of the prices in that
town homes would have sold for double what they were going for.
Then there is the concept of negative value, which might seem
very contradictory, but can be understood with a simple example.
Suppose an old car needs $1,200 in repairs to function properly,
but after being repaired it will only be worth $800. It seems
clear that even having such a car given to you is a bad deal,
since it has an apparent negative value of $400. After all, you
could just let someone else spend $1,200 to repair a car and
then buy it for $800.
There is another important concept here, which we might call
"true value." Some will claim that it does not exists,
that value is only a relative term, and only determined by the
market. But is a stock or any other investment worth any price
just because the market is willing to pay it at the moment? Can
nothing actually be overpriced? If we accept the concept of something
costing "too much," then we implicitly accept that
there is some "true value" of things, whether or not
we can measure it easily or at all.
Now we come to the area of value beyond the price or other
measurements. An apple is of value to us because it nourishes
the body and brings some pleasure in eating it. That is apart
from whatever the price is. Now, what is of real value to us?
The price of a pack of cigarettes might be six dollars, and the
value to a store that will sell it for a profit that may be five
dollars, but is it of any real value to the consumer?
Certainly we get pleasure from things that are unhealthy for
us. We also get pleasure from expensive cars or boats, the cost
of which may cause us great financial difficulties at some point.
Where does the balance lay though? Is it a net value when we
lose sleep over debt that was incurred for a lot of pleasure?
Does the enjoyment of tasty but unhealthy foods outweigh the
early death or disease that results?
The deeper question is something like this: Is the concept
of "true personal value" based on what is actually
good for us (body mind and soul?) or on what we think is good
for us or simply what we desire?
Value is a slippery concept.