Value is a term that expresses the concept of worth in general, and it is thought to be connected to reasons for certain practices, policies, or actions.
In marketing, the value of a product is the consumer's expectations of product quality in relation to the actual amount paid for it. It is often expressed as the equation:
Value = Benefits / Price
- or alternatively:
- Value = Quality received / Expectations
In neoclassical economics, the value of an object or service is often seen as nothing but the price it would bring in an open and competitive market. This is determined primarily by the demand for the object relative to supply. Other economists often simply equate the value of a commodity with its price, whether or not the market is competitive.
In classical economics, price and value were not seen as equal. In this tradition, to Steve Keen "value" refers to "the innate worth of a commodity, which determines the normal ('equilibrium') ratio a which two commodities exchange." (Debunking Economics, p. 271,
ISBN 1-86403-070-4.) To Keen and the tradition of David Ricardo, this corresponds to the classical concept of long-run cost-determined prices, what Adam Smith called "natural prices" and Karl Marx called "prices of production." It is part of a cost-of-production theory of value and price. Ricardo, but not Keen, used a "labor theory of price" in which a commodity's "innate worth" was the amount of labor needed to produce it.
In another classical tradition, Marx distinguished between the "value in use" (use-value, what a commodity provides to its buyer), "value" (the socially-necessary labour time it embodies), and "exchange value" (how much labor-time the sale of the commodity can claim, Smith's "labor commanded" value). By most interpretations of his labor theory of value, Marx, like Ricardo, developed a "labor theory of price" where the point of analyzing value was to allow the calculation of relative prices. Others see values as part of his sociopolitical interpretation and critique of capitalism and other societies, and deny that it was intended to serve as a category of economics.
Economists such as Ludwig von Mises asserted that "value" was always a subjective quality. That there was no value implicit in objects or things and that value derived entirely from the psychology of market participants.
The theory of value is closely related to that of allocative efficiency, the quality by which firms produce those goods and services most valued by society. The market value of a machine part, for example, will depend upon a variety of objective facts involving its efficiency versus the efficiency of other types of part or other types of machine to make the kind of products that consumers will value in turn. In such a case, market value has both objective and subjective components.
In computer science, a value may be a number, literal string, array and anything that can be treated as if it were a number. The exact definition of a value varies across programming languages. For more, see value (computer science).
In mathematics, a value is a quantitative value - a constant (number), or a variable.
In law, particularly with respect to contracts, value is a concept closely related, but not identical, to that of consideration.
At common law, certain transferrable obligations were only enforceable if the transferee had acquired them for value. Under the rules of equity, the rights of a bona fide purchaser for value would not be interfered with. State courts of various jurisdictions in the US adopted varying definitions of what constituted "value".
Under the Uniform Commercial Code, except with respect to Article 3, a person gives value for rights if he acquires them in exchange for:
- a binding commitment to extend credit or for the extension of immediately available credit;
- as security for or in total or partial satisfaction of a preexisting claim;
- accepting delivery pursuant to a preexisting contract for purchase;
- generally, any consideration sufficient to support a simple contract.
Under Article 3 of the Code, a negotiable instrument is transferred for value if the transferee receives in exchange:
- a promise of performance, to the extent the promise has been performed;
- a security interest or other lien in the instrument other than a lien obtained by judicial proceeding;
- the total or partial discharge of an antecedent claim against any person, whether or not the claim is due;
- another negotiable instrument; or
- an irrevocable obligation to a third party by the person taking the instrument.
The setting forth in express terms of what is "value" in the context of commercial transactions was a bold step forward by the drafters of the UCC, since the jurisdictional distinctions as to value made certain transactions valid in one state and invalid in another.
Personal and cultural values
Each individual has a set of beliefs and ideas about general concepts that are called values. They describe how much value a person places on various ideas, objects, or beliefs. Societies have values that are shared between many of the participants in that culture.
These values can be grouped into four categories:
- Ethics (good, bad, moral, immoral, amoral, right, wrong, permissible, impermissible)
- Aesthetics (beautiful, ugly, unbalanced, pleasing)
- Doctrine (political, ideological, religious or social beliefs and values)
- Inborn (inborn values such as reproduction and survival, a controversial issue)
A value system is in essence the ordering and prioritization of the values (usually of the ethical and ideological varieties described above) that an individual or society holds.
Last updated: 09-12-2005 02:39:13