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Some Thoughts on Value

Although we all think we understand the concept of value, it isn’t 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.


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Value

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