Value is in the eye of the beholder

Economics can not answer the question: Which is more valuable? That is a question that is left for the individual to decide for themselves. Value is not necessarily turning raw materials into finished goods. For example, lets say that I want some logs. You can take those logs, turn them into useable lumber, build me a house, and you still might not have added value. Maybe I am freezing cold and I wanted to burn the logs.

Each person values different goods and services. They do not have absolute value.

When you want lumber, though, you want value-added logs. The same goes for any finished good. You want a knife? That's value-added iron. You want a microprocessor? That's value added silicon (mostly). Value is in the eye of the beholder to a certain extent. However, to a person who wants lumber, lumber is always more valuable than logs.

PS, if you argue that point, you are equivocating on the word "value." Value, in context, means precisely "that quality of worth that is added to a raw good when it becomes a finished good."

B-Ran wrote:PS, if you argue that point, you are equivocating on the word "value." Value, in context, means precisely "that quality of worth that is added to a raw good when it becomes a finished good."

Value is something that is determined by the individual. It is not necessarily a finished good, a raw material, a friendship, art, information or anything else. What a person values, he values. Can you say that I am wrong for wanting logs over lumber? Can you say that I value a necklace more than the silver it is made from? Of course you can not. You have no way of determining what I value, nor is it your right to tell me what I value or not. The fact is, the raw materials or finished goods can be valuable to me because of asthetic reasons, ease of trading the items, utiltity of the raw products in the form of finished goods, religious reasons, emotional reasons, or whatever. What I value something at is shown by what I am willing to give up for it. It is my God given right to determine what I value, and I do not always value something more because someone has worked to make it a "finished good". In fact, sometimes a finished good is worth less to me than the raw materials it was made from.

B-Ran wrote:When you want lumber, though, you want value-added logs. The same goes for any finished good. You want a knife? That's value-added iron. You want a microprocessor? That's value added silicon (mostly). Value is in the eye of the beholder to a certain extent. However, to a person who wants lumber, lumber is always more valuable than logs.

Who are you to say that lumber is value added logs? Maybe I wanted logs more than I wanted the collective lumber within. Let's just say that I want to build a log cabin... Logs are of more value than lumber to me.

Lets take this a step farther. What if I value logs for religious purposes... Who are you to say that I do not value those uncut logs as much as I value lumber? The fact is, what I value is going to be different than what other people value, and that is expected... as long as you realize that simply adding labor to the equation does not necessarily make the good more valuable.

You might argue that religion can be kooky and not reasonable... That is a fair argument. Let's assume that I want to build a log cabin. Logs would be of more value to me than lumber. Again, just because you refined a product to what is conventionally seen as more valuable, does not mean that I will value it as highly.

I'm saying, if you want lumber, what you want is value-added logs. If you want logs, you want value-added trees. If you have trees and you cut them down, then you don't buy them and the point is basically mute. If you wanted logs and I gave you lumber instead, then I'm doing it wrong.

Enron wrote:

B-Ran wrote:PS, if you argue that point, you are equivocating on the word "value." Value, in context, means precisely "that quality of worth that is added to a raw good when it becomes a finished good."

Value is something that is determined by the individual. It is not necessarily a finished good, a raw material, a friendship, art, information or anything else. What a person values, he values. Can you say that I am wrong for wanting logs over lumber? Can you say that I value a necklace more than the silver it is made from? Of course you can not. You have no way of determining what I value, nor is it your right to tell me what I value or not. The fact is, the raw materials or finished goods can be valuable to me because of asthetic reasons, ease of trading the items, utiltity of the raw products in the form of finished goods, religious reasons, emotional reasons, or whatever. What I value something at is shown by what I am willing to give up for it. It is my God given right to determine what I value, and I do not always value something more because someone has worked to make it a "finished good". In fact, sometimes a finished good is worth less to me than the raw materials it was made from.

No. Value means, in context, "that quality of worth that is added to a raw good when it becomes a finished good." I'm not talking about "what someone is willing to pay for a given thing." Those are two different definitions. You can tell me that you would be willing to pay the same amount for a raw good as a finished good, but were I a business owner I wouldn't be a wise one if I gave you a finished good for the same price as a raw good. Besides, you don't go to a furniture store looking for logs. You go looking for furniture. And, by necessity, the furniture will be higher-priced than the raw goods that go into making it.

I really can't grasp the difficulty you have with the term "value-added."

B-Ran wrote:No. Value means, in context, "that quality of worth that is added to a raw good when it becomes a finished good." I'm not talking about "what someone is willing to pay for a given thing." Those are two different definitions. You can tell me that you would be willing to pay the same amount for a raw good as a finished good, but were I a business owner I wouldn't be a wise one if I gave you a finished good for the same price as a raw good. Besides, you don't go to a furniture store looking for logs. You go looking for furniture. And, by necessity, the furniture will be higher-priced than the raw goods that go into making it.

I really can't grasp the difficulty you have with the term "value-added."

I am having difficulty grasping the fact that you will not recognize that certain goods are of different values to different people.

VALUE IS NOT OBJECTIVE. WHAT YOU VALUE IS NOT NECESSARILY WHAT I VALUE. If I value logs to make a log cabin, who are you to say that a million toothpicks are more valuable than logs (that made the million toothpicks) to me? Only I can answer that question. Only I can value the toothpicks more or less than the logs that the toothpicks came from. If I value building a log cabin more than picking my teeth, I will value the logs much more than I value the toothpicks made from those logs.

Here is a sure way to tell whether or not value is objective: Will you be willing to pick up the dog crap in my back yard for $6? There would be some people who would be willing to do so, and some who would not. Obviously, this means that some people value that $6 more than others and/or some people value not picking up dog crap more than others.

Some people will value a gold coin more than gold jewelry made from that coin. This is another example that a raw material being manipulated does not add value to everyone. For some people, maybe it will. For others, they will value the coin more in its original form.

the only real way to define "value" is to look at what people are willing to pay for something.
just because a mill pays it's employees to turn logs into lumber doesn't mean they added value. they added to the amount of money they have invested in that product, but that doesn't make it objectively more valuable.
there is such thing as someone devaluing something even by putting more money into it.
take a piece of art for example. where does that get it's value? if i were to take a classic painting and pay someone tons of money to make it better, it becomes more valuable to me possibly, but to most everyone else it has lost value.

What do you think I am saying when I say value-added? I think that you answering that question will help me understand why you keep disagreeing with a point I am not making. And please paraphrase, so that I can see if you are on the same page as I am.

You understand that "value-added" is a technical term almost wholly unconnected with "value" in the sense you are referring to value, right? I know what you are saying, which is that any given good can only ever be sold at a price a consumer is willing to way. The price a consumer is willing to pay is based on the value he places on that good. Stop me if I'm wholly confused here.

B-Ran wrote:What do you think I am saying when I say value-added? I think that you answering that question will help me understand why you keep disagreeing with a point I am not making.

We're on two different pages here.

I am assuming that you are talking about something being more valuable objectively in one state or form than another. Regardless of what someone means by value added, value is ultimately in the eye of the beholder. An individual could have completely different values than another person. For example, one person could value gold nuggets more than gold coins, while another values gold coins more than gold nuggets, while another values gold jewelry more than either gold nuggets or gold coins. I am assuming that by value added, you are saying that something is objectively more valuable in a particular form than in another form.

See, I'm just talking about the specific difference in price between what a producer pays for a raw good and what he sells that good for.

In math terms,

(Sale price)-(Price of raw good)=Value Added

Usually, the value added is what the producer believes his labor is worth, or whatever he believes other people believe his labor is worth. Whatever is higher.

B-Ran wrote:See, I'm just talking about the specific difference in price between what a producer pays for a raw good and what he sells that good for.

In math terms,

(Sale price)-(Price of raw good)=Value Added

Usually, the value added is what the producer believes his labor is worth, or whatever he believes other people believe his labor is worth. Whatever is higher.

Often times this is the case. I am saying that value is something that is subjective.

What could it be other than subjective? Admittedly, this is something like a rhetorical question. But, really, have you come across anyone who would say that value isn't subjective? If so, why?

B-Ran wrote:What could it be other than subjective? Admittedly, this is something like a rhetorical question. But, really, have you come across anyone who would say that value isn't subjective? If so, why?

Marxists believe that value is determined by labor invested. This belief is the premise that allows Marxists to believe that workers are taken advantage of by entrepreneurs, which is a primary injustice that Marxism attempts to fight. As crazy as it sounds, some people actually believe that value is not subjective. That is the reason that I started this thread, to make sure that we discussed this and were all able to agree that value is subjective. I know that Brain Train wasn't necessarily saying that value is objective, but the conclusion could have been drawn when he said that value is created when raw goods are refined into finished goods.