For my second research round, I’ll like to take a look at value, particularly economic value. There’s an element of psychology when it comes to value (which I will explore later) though for now I want to look at the economic side of things.
Value, in a very simplistic sense, is the price or time a consumer is willing to pay for a particular item. The value of an item is generally determined by supply & demand and utility.
Utility is the perceived usefulness or satisfaction gained from an object. An example of this is chocolate. For the average person, the consumption of chocolate results in higher utility. Consuming another chocolate would provide lots of utility, though it would be slightly lower than the first chocolate. Over time, the more chocolates consumed equals lower utility over time. Utility changes based on the needs and experiences of the customer, resulting in a change in economic value.
Supply and demand is based on utility, though it includes many more factors. Supply and demand is a collection of data that tells how much of something a consumer is willing to buy at each price. For example, a consumer will buy 4 pencils at $.25, 2 at $.50, 1 at $1, etc. Market value is generally determined by the market equilibrium; a compensation between how much a consumer is willing to pay (demand) and the amount a producer is willing to supply. (Mathematically, the market equilibrium is based on the supply curve and demand curve, specifically where they intersect when the data is graphed). If supply went up, the demand would go down. If supply went down, the demand would go up, and therefore the price of the product would go up. (These scenarios are very simplified, though they still show the relationship between curves in supply, demand, and price.)
Alternatively, there’s another way of determining price according to Karl Marx. He argues that price is fixed, and that the amount/type of labour used in the production of the product should be the determining factor. This is in contrast to finding value based on the finished product only (without consideration of the labour required).
Relating this back to my project on irrational value, utility is an important concept for how intangible property is viewed. Labour as well as Supply and Demand probably aren’t the most important factors of pricing, so the overall satisfaction and usefulness should be important to consider. Though, when it comes to something like bitcoin or stocks, how is utility recognized? That’s something I’m considering to look into further for my next research round, as this round was mostly focused on tangible objects and the overall idea of value.