Someone who doesn't shop much might not know the value of a bag of peas,
Of course they will. They just won't know the usual price of a bag of peas, nor will they understand the purchasing power of the money they have.
But they will still have a very clear idea of how much stuff they are willing to go without in order to own a bag of peas. Would they give up their house? No. Their car? No. Ten minutes of their time performing work? Perhaps.
Now, obviously since they do not use money for making purchases very often, they won't have a good sense of how to translate all that into dollars and cents.
That doesn't mean they don't know the value of a bag of peas.
If you need to know the value of something rare like a flintlock from the early 1800s then you need someone who knows the prices at which such rare items change hands (an expert for lack of a better name), and it is those prices that determine value.
No. If you need to know the value
to someone else of something rare like a flintlock from the early 1800s then you need to ask someone else or someone who specializes in knowing what value collectors place on items such as early 1800s flintlocks.
Technical definitions involving marginal utility and so forth have analytical value because they can be plugged into equations and used in economic models, but people aren't usually very analytical about purchasing decisions until the prices get interesting.
What 'technical definitions'? The values used aren't thought up in a stuffy room in the basement of a university building. The value people place on things is measured by observing how people place value on things. So to say that these measurements cannot be relevant or meaningful because people don't behave in the manner they describe is nonsense. Obviously people behave in the manner described because the manner described is found out by actually watching people behave.
In most day-to-day life very little thinking goes into purchasing decisions.
Of course, because people know the value they place on things intuitively, so they don't
have to think about it.
I need gas to get to work, so whatever the price of gas is today, that's what I pay.
And when gas was cheaper I needed gas for joy riding... but I don't do that anymore. Funny. You would have thought that as the price of gas went up, the value I placed on using gas (joy riding, for example) would have increased as well.
Of course it didn't. The value I place on joy riding has remained relatively unchanged and so as the price of gas increases above and beyond the value I place on joy riding, I consume less gas. This
should be easy enough to figure out, of course, because its reflected in the classic supply/demand curve everyone learns in Econ 101.
Analytical economists can claim that the price I paid exceeded the value I assigned, but nothing like that was going on in my head,
Of course not. Because by the definitions that economists use in describing value, the price you pay always has to be
at least somewhat less than the value you assign. If you pay $300/gallon, then the economist will tell you that you value gas at
at least $300/gallon. That is how economists figure out what value people place on things: by watching their consumption behavior.
they find that such simplistic models, convenient as they are, only capture part of what is really going on.
Huh? Those 'simplistic models' are constructed around data collected from 'what is really going on'.
For some goods increasing price can actually increase sales.
Yes. And I already addressed that. People can consider price in determining their value of things, just like they can consider the quality of the pain reliever, the utility of the plastic bottle it comes in, the color of the picture on the box, and so on. I have never once said that people cannot consider price in determining value. Obviously people can consider whatever the hell they want.
I think the biggest problem we've had in this thread is an insistence that one's position is correct to the exclusion of any other position, no matter how minor the differences might be.
Your position might be right, it might be wrong. Some things you've said are right. Some things are just nonsense.
Unfortunately, you've been jumping all over the place so much that it's been impossible to really figure out what your actual position is.
I wish we could have had a more enlightening discussion.
I feel very enlightened.
Jon
Love your enemies!
™ Version 4.2
