Intrinsic Value - Ain't No Thang

One concept I repeatedly come upon when debating economics is intrinsic value. It's so hard to imagine that something useful or something big, or something aesthetically pleasing, or something complicated, or something that takes many man-years to produce, doesn't have a value in and of itself. Never mind exactly what that value might be, it's at least almost obvious that it exists.

If I were to make a low-ball offer for something that someone felt had intrinsic value, he might feel insulted. Even if I were to charge someone significantly more than he felt it worth, again, he might feel insulted - as though I were taking advantage of him, or as though I were blind to the "true" value of something.

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Whether we're born with the concept, or mistakenly learn it, intrinsic value is something in which I'd bet almost everyone believes at some point.

So what?
Most of the time it doesn't matter. In fact, if enough people think that something has intrinsic value, it's difficult and almost pointless to say otherwise. For the time being at least, it has a somewhat stationary value, and it appears to be self-evident that it shan't change. It's only when circumstances change in some unforeseen manner that reality sets in and proves otherwise.

So what's it worth?
Something only has value, to me, if I value it. If something helps me accomplish a goal, or makes me feel good, I'll value it. That's simple enough. If I don't value it directly, but I know that others do, I'll value it for the things of value which I can obtain through trading (or selling) it. It's hard to say that five times, fast, but it's important.

Subjective Value
But that's actually when value gets murky - when I estimate value based on other's valuation. Doing so, I use a vascillating ruler. Most of the time the ruler might be useful, but occasionally it's proven very misleading. If I purchase a house (or an equity, or an in-style shirt) because I know that others are "catching-on", and will soon see it's "true" value, I might forget that others may soon follow the same logic. They've seen the meteoric rise in popularity of that house (or equity, or shirt). If they don't act soon, they fear, there might not be enough to go around. If they purchase it now, they hope others will pay dearly for it (or admire one's keen fashion sense) later.

Is it any wonder that a price chart of any publicly traded company is anything but stable? A stock is valued not only "intrinsically" by what dividends it pays. It's also valued by what one thinks he thinks you think she think's I think it's worth. Each of those "thoughts" are guesses at best. The worst part is, I only bought it because it has a neat-sounding name.

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Haven't thought this through

Haven't thought this through yet, but can't you use a reductio ad absurdum argument against intrinsic value? If everything were valued identically by all parties wouldn't we be making identical decisions?

Also, marketing departments would have a much easier job of pricing since they would only have to employ one person who recognizes intrinsic value instead of having to do all of that messy statistical analysis with test markets and competitive analysis.

what about humans? Perhaps

what about humans? Perhaps one could also make the argument that humans seem to have an inuitive intrinsic value.

Robert Pirsig (author of Zen and the Art of...) argues this exact point, I believe, in his treatment of "quality." Inuitiviely it does seem that there is some essence to things which can be labeled "quality" and isn't purely subjective.

Building on what Matt said,

Building on what Matt said, why should we value respecting the rights of other humans? Is there something intrinsic about humans that gives them value apart from everything else in the world?

I don't think there is. But one could make the contractarian argument that since we all have our own subjective values, it is in our self-interests to respect the subjective values of others.

If everything were valued

If everything were valued identically by all parties wouldn?t we be making identical decisions?

I'm not saying everyone agrees on what the intrinsic value is - nor that anyone actually claims to know the exact "correct" price. Just that many believe that it shouldn't be dictated by the market.

Building on what Matt said, why should we value respecting the rights of other humans?
...
one could make the contractarian argument that... it is in our self-interests to respect the subjective values of others.

I agree. I think that's the key part: those who don't recognize that self-interest probably find it much harder to succeed - unless they've got a really big stick.

That sure is a sweet looking

That sure is a sweet looking car, and in our primitive world, it seems to have quite a lot of value to most people. Maybe even some intrinsic value at first glance.

But suppose we fixed up (or shut down) the FAA, and affordable skycars started showing up on our car lots. Before long that formerly sweet looking car would be good only for showing at museums, next to the horse-drawn buggies. The value that looked so solid and intrinsic would be gone without a trace.