Hello again everyone,
This week I am looking into my first round of research on my newest topic: humans and value. More specifically, I am looking at humans and their process of assigning values. This week, I would like to cover the origins of currency, value, and how value impacts perception. The last part bumps (value's impact on perception) overlaps slightly with my previous round of research. If you would like to read my project plan, you can find it here: http://www.pa-mojabutterfly.co...aterials-and-objects
First recorded in Egypt, it is speculated that early man relied on a bartering system at the beginning of time (around 9000 BC). Earliest forms of barter were things like cattle, grain, sheep, and vegetables. Around 600 BC, the first currency was created in what is now known as Turkey. Many years later in 1661 AD, coins evolved into bank notes (paper money), and in 1946 the first credit card was introduced. (1) However, this information is highly debatable. Some scientists argue that the history of cash currency dates back 40,000 years (https://theconversation.com/wh...rt-using-money-78887) where others say that bartering was the go-to since forever.
The picture below illustrates a full timeline of the speculated progression of currency:
In and of itself, money does not have value. Whatever you use as currency--be it shells, paper, gold, or even stickers--it does not have value as the thing itself. In this day and age, if you tried to buy a loaf of bread with some shells, you would be turned away. In a society that used shells as their method of currency, you would be able to complete this transaction. This is because, in our culture, shells have no value. Inversely, if you tried to use a $20 bill in a place that used shells as currency, your $20 bill would be worthless. (6,2)
The value humans place upon money does not relate to its inherent value. Instead, money's value stems from its ability to be used as a medium of exchange. This means, that instead of having a usable value (e.g. water is valuable to an individual because they can use it, they need it), it has a perceived value based on what you can use it for (e.g. the paper that we use as money does not have value as paper, it has value as a method of payment. Regular pieces of paper do not have the same value that dollar bills hold because dollar bills have a recognized value as our currency. Dollar bills are not used as a method of payment because they are valuable, they are valuable because they are useful as a method of payment.) Money with no inherent value, paper money, is referred to as "fiat money". Fiat money has no intrinsic value; that is, it has no useful value until we trust it as valuable (confusing, but I hope it makes sense later).(2,6)
Now, what exactly is bartering? "Bartering: exchange (goods or services) for other goods or services without using money. (3,4) Next, why did people phase out the bartering system? Well, there were many issues with bartering. First, the amount of time it would take for people to agree on a deal. For example, say I am offering to mow someone's lawn if they are willing to fix my dishwasher. First, I need to find someone who knows how to fix dishwashers. Next, they need to agree to my terms (in other words, they have to have a need for what I am offering. In this case, they need to have a lawn that needs to be mowed). The difficulty with this system is that it is very hard to find someone who fits exactly what you want. Moreover, in the case of exchanging goods, it is difficult to carry these goods accessibly on hand. Say I am wiling to give someone a dagger in exchange for a new television. I need to not only find someone who applies to my wants, I also need to arrange a time for us to do an exchange. Unlike with paper money, I can't just carry a dagger around with me all the time, just as my desired trading partner cannot carry a television with them all the time. Lastly, there is an issue with trust. The person I trade with could give me a broken, old, or outdated television.(2,4)
(5) (A Chinese Coin from early 1400s)
Money, however, would easily increase the speed of business, enable migration and settlement, and allow people to carry their currency with them more accessibly. (2,5) Money was highly valuable in trade routes; by using a common currency, people all across the world could trade easily with one another. A valuable example of this is the Silk Road Trade. (5)
Lastly, a little on cost and quality. In numerous studies, people have found that things thought to be priced higher are better received. For example, in a study with wine, experienced wine tasters and everyday wine consumers agreed that the wine they believed to be more expensive stimulated them more than the one thought to be cheap. In actuality, both were the identical wines, and all of the differences these people believed existed were in their heads. (7)
Although this doesn't work in all situations (e.g. when one company sells a Contigo water bottle for more than another company does, people do not automatically assume that the expensive one is better. If both companies are selling the same water bottle--brand and everything--then the consumer will likely go for the cheaper one, believing they are scoring a deal), it applies as a general rule to goods. This is probably due to a customer's general inability to perceive the real quality or value of a product, so they look for factors that generally imply a nicer quality. Moreover, naturally, people tend to be skeptical of the cheapest deal they find ("too good to be true"). (7,9)
Well, I know this was a bit of a short research round, but that's all I have for this week! Next week I'll be looking at how companies assign values to goods and services.
Thank you all for reading, good luck with your research!
(1) - https://www.telegraph.co.uk/fi...rter-to-bitcoin.html
(2) - https://www.investopedia.com/a...7/roots_of_money.asp
(3) - https://www.google.ca/search?q...=chrome&ie=UTF-8
(4) - https://www.mint.com/barter-sy...the-past-and-present
(5) - https://theconversation.com/wh...rt-using-money-78887
(6) - https://www.thoughtco.com/why-...ey-has-value-1146309
(7) - https://www.ianbrodie.com/high...e-perceived-quality/
(8) - https://www.retently.com/blog/...stomer-satisfaction/