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0 sats \ 8 replies \ @Undisciplined 5 Dec \ parent \ on: Music Has No Economic Value; Convince Me Otherwise (TDE, Joakim Book) BooksAndArticles
Economic value of the marginal unit is equivalent to market price. Air and gravity have economic value (we would pay for them if we had to), but a zero price.
no, that's pretty clearly wrong. They don't have economic value, simply because they exist in abundance (any feasible demand summed up across all humans is less than what's plentifully available). Hence no price.
So yea, you're right that I'm equating those things. Should I not?
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Economic value is the value that person places on an economic good based on the benefit that they derive from the good.
I just grabbed this from investopedia, not because it's authoritative of course, but I think it might help orient the discussion.
The way I think about economic value is that it's equivalent to what people would pay for something. What people actually have to pay for things involves a bunch of factors beyond subjective valuations, so it seems less relevant conceptually and further removed from the source of value.
Abundance can only generate consumer surplus if the abundant things are valued.
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uh-hu, what's our disagreement, then?
An abundant good (or free good, like air or gravity or atmosphere or whatever) is entirely consumer surplus. The market price is zero. If there were a recipient on the other side of that I can choose to give some of the consumer surplus value back -- i.e. donating or zapping or giving money to musicians.
But the fact that we would or could pay for something is distinct from its economic value I would say; and it's what turns paying for music into donations rather than consumption of a produced good/service. I give out of my consumer surplus; but you as a producer have no scarcity value such that you could charge a price
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the fact that we would or could pay for something is distinct from its economic value
That is the disagreement. The value of a good is what the consumer is willing to pay for it. Price and willingness to pay are totally different concepts.
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They value is subjective, the price is objective. Only the consumer knows what satisfaction he will derive and where on his priority list it lies and therefore the value of the good. The price is what is exchanged on the market for the good and can be objectified very quickly and easily: look at the receipt.
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You are stating the subjectivist argument here.
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Yep. I think we're both trying to make subjectivist claims, though.
Even though prices are objective, there is a sense in which they help us classify things:
- Goods have positive prices
- Bads have negative prices
- Neuters have zero prices.
The subjective element that's missing from this is the willingness to pay. Some things are bads for one person, but goods for another: industrial waste products that are an input for another industry, for instance.
Price only tells us the status of the marginal unit of that good, rather than the entire stock.
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Yes, however only the consumer of the goods can determine if it is a good, bad or neutral. For instance: fluoride that THEY put in the water is supposedly a good for the population, but it is a bad for the fertilizer industry because it is a toxic waste. Tooth decay is bad for the consumer but a good for the dentist and toothpaste industries. What is good for the goose is not always good for the gander in this case.
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