A strange yardstick

Metres or miles, kilograms or pounds, months or seconds, and indeed money — they’re all yardsticks that allow us to quantify length, weight*, duration and value. But there is something strange about the latter one.

In economics, money is said to fulfil three functions. It is a store of value and a medium of exchange (you can keep it in your bank account or your mattress until you are ready to spend it in return for some good or service), and it is a unit of account, or a yardstick. You can express the price of a tin of paint in pounds, dollars or euros — or whatever currency is appropriate for you — just like you can express the quantity in (milli)litres or fl.oz, quarts or gallons. And both units are quite handy. If you need some paint, you can determine how much “some” is by expressing your required quantity as a number of units, and so make sure the quantity you buy is sufficient to meet your need, without exceeding it by too much. In a similar way, you can ensure the total price fits withing your budget.

Not so objective

The content of a tin of paint is objectively and invariably, well, what it says on the tin. That is not quite the case for the price, though. Maybe the store at the other end of town…