Value and money
April 28th, 2009 | Published in Economics idea
How do we value things?
Unless forced to, we don’t usually value things numerically. We don’t have a mathematical structure to evaluate the usefulness of the things in the world we live in. The problem isn’t mathematics, it’s us. Mathematics is too precise a tool for us to use when thinking about value.
The problem is that we care about a lot of different things and don’t really know how to make tradeoffs. We care about basic things like food and water. We don’t want to get hurt or get sick. We like having friends and family around. There are all sorts of things that we either seek or try to avoid. We don’t, unfortunately, know their relative importance. Is it worth a little pain to get food? If you might catch a cold from a friend, should you avoid him? There aren’t simple answers.
Just because we use money to buy and sell things doesn’t mean we have a mathematical system of value. We use it as best we can, but we certainly make mistakes, big ones. Until we know what the meaning and purpose of life are and have the computational power to analyze the world mathematically, value can only be a very fuzzy concept.
Do prices contain information about value? Perhaps. But I don’t know what value means.
