Prices Tend to Change While Value Is Constantly Relative

Prices Tend to Change While Value Is Constantly Relative

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Prices Tend to Change While Value Is Constantly Relative

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1. By definition, determination and representation, price and value are different, however, depending on the perceiver, they can be equal to one another. When it comes to a good, or service, there are two primary factors that impacts an individual’s perception of whether or not price and value are equivalent: utility and income level.

An example of this is an experience I personally had just last week with my sister. Income level, one of the two determinants, is relatively equal between her and I. Two weeks ago, I spent around $1,000 for two round trip plane tickets to go home to NYC for the holiday. To me, it was effortless to succumb to the pricing as the value of going home to see my family and be there on a holiday that is important to me, matched the price I paid. When my sister learned about the price I paid, she felt that it was a massive waste of money, and that I should’ve waited to buy them during off-season because it wasn’t worth that price to fly home. The day I arrived in New York, I tagged along with my sister as she went shopping for a New Year’s outfit. We walked into a boutique in SoHo where she bought a designer dress for a little over $600. To me, the value of that dress was nowhere near $600, and I would never spend that on the gold sequined cloth (or any clothing for that matter). On the other hand, my sister didn’t budge nor think twice when she swiped her card to buy the dress. She said for the quality and the designer’s name, the price was worth the value. To me, there is no name or material that would be worth spending that level of money on. This simple example shows that the price, what is charged by the seller, and value, the perceived utility or worth based on the buyer’s perspective, can be either the same or different depending on the beholder.

Another example of how price and value are different is evident in the stock market. When it comes to a stock, the price of the stock may be more, or less valuable than the company/product that it represents. While the value of a company is most easily: Assets-Liabilities, stock prices are not this straightforward. Stock prices tend to reflect investor sentiment and represent the perception of the company/products (impacted by various factors, most commonly news/world events). It is said that stock prices tend to return to be proportional to the value of the underlying company it represents, but the fluctuations and price changes in response to current events and news can greatly skew the price even if the company’s worth is unchanged. This example brings me to my final differentiator between price vs value: prices increase and decrease, whereas value tends to be relatively constant.

2. Value and price are different. Value is what people give to an object through their labor, and price is what people use to measure the value of an object in money and trade it. In the case of art, their value is difficult to measure in terms of price because price is not a sufficient guide, and auctions are often the best way to trade arts. Everyone has a different preference or opinion of the value of the same art, some people will pay a high price for it if they think it fits their aesthetic, others will not trade it if they think it is worthless.

Museums often display collections that are so valuable that no amount of money can be spent to purchase a museum’s collection (such as the Mona Lisa’s smile). Admission to the museum is free, which is a visual treat for the visitor without the need to buy the collection. Visitors can enjoy valuable artworks at a lower cost.

The musician’s brainstorming to create a new song is valuable to the musician, and the music also conveys emotions to the listener, which is also valuable to the listener. With the advent of pirated music, the cost of audio to the listener is zero, but the value of the music to the listener remains the same, and pirated music maximizes the utility to the listener.

3. Price and value are different, yet complementary to each other. Price adds up the value of the creation while valuable things cost higher or people do not hesitate to spend on the valuable things. Neoclassical economists see price as the value of particular goods or services. However, the value of such goods or services differs from one individual to another along with their different choices and requirements. This is true in all other economic entities except the cultural ones. As per art is concerned, there is the majority of people who value them but very few pay for it. It is because art does not carry the value of primary requirements to their everyday lives.
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Artists spend so much effort, time, and money to create art. In return, they get immense love and support which is the value. But that does not necessarily mean that the supporters are willing to support them financially, to pay a price. So, value and price work differently in the case of art, unlike commercial goods and services where high value confirms high price. Reversely, adding up the price to the artistic works is the reduction of the people who value them because they cannot pay or do not want to pay for the same art they were valuing just before adding a price. This case is commonly taking place in entertainment industries where people listen to music or watch movies on YouTube or other platforms only when it is free of cost. As soon as the music and movies become payable, the audience falls shorter. In this sense, the price and value of something is a different phenomenon.

Getting price and getting value are two different things in the case of art. Some arts only get value while some only get price. However, it will be best to have both at a time in a complementary manner.

Prices Tend to Change While Value Is Constantly Relative

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