Value, imagined
Is the value of stuff we buy, from grapefruit to airline seats, in the mind of the beholder?
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Magic doesn’t really exist, but in a way, economics comes close. Contrary to what common wisdom maintains, there is something that is pretty much a free lunch: the miracle of trading. Just think about it: I’m going to the greengrocer’s to get my weekly ration of grapefruit, and come back with eight of them (they’re a little cheaper if you buy them four at a time), for just £2.80.
I think that’s tremendous value for money — I would certainly still buy them if they were, hmm… say 50p or even 70p a piece. While I am £2.80 poorer than before the transaction, instead I now have the fruit, which I think is worth more than the money I had to pay. At the same time, Mr Clarke is happy enough to discount his grapefruit from 39p to 35p if you buy them in fours, so we can presume he is, even at that price, still making money out of selling the golden orbs. We’re both winners in this transaction — isn’t that almost like magic?
Things can get a bit more complicated, though. Not all voluntary transactions feel as if they are a win for the buyer.
Hand made, or mind made?
Imagine you visit a craft fair where you spot a stall with pottery, hand made by African tribeswomen. It is not at all expensive, especially bearing in mind that they are unique pieces, and of course your purchase will support the villagers. So you happily hand over £20 for a nice fruit bowl (suitable for grapefruit). But two days later you see someone else selling very similar handmade items at an ethnic market. One of the items on display looks remarkably like the bowl you bought earlier. At that moment, a customer walks up and buys that exact piece. As soon as she is gone, the seller ducks underneath the table, and produces an identical “unique” piece, putting it on the spot occupied by the one just sold not three minutes ago. You’ve been had. That evening, you go agoogle on the internet and discover that you’re not the only person who’s been taken for a ride: apparently there is a factory in the Far East, churning out this earthenware by the containerload, supplying dodgy vendors all over the world.
