1eyedjack Posted November 13, 2011 Report Share Posted November 13, 2011 Readers of this forum would never confuse the two, but that doesn't stop the media and retailers thrusting the confusion down our throats as in a war of attrition. When I read in The Week an abridged report that a piece of art "worth" GB£624K had been destroyed by a cleaner mistaking it for a stain, it brought to mind my definition of "worth": The price paid by a willing buyer to an unconnected willing seller in an open market bargain at arm's length. Had someone, I then thought, actually offered £624K to buy it? I suspected not. So I googled the full story and found it here.http://www.heraldsun...6-1226185390111 Other (UK) reports valued it at £690K but I expect that variations just depend on which exchange rate you use to convert to which currency. Let's settle on US$1.1 million. OK, in fairness, the quoted value is that which some sucker of an insurance company was prepared to underwrite, but that is also not really a true reflection. The underwritten value will be largely dependent on two factors: the premium that the insured party is prepared to pay, and the risk perceived by the insuror of a valid claim. I grant that there is an incentive on the insuror not to accept an overvaluation, as that would increase dramatically the risk of claim. Even so, $1.1 million??? I rather wish I could have seen an image of it. All the reporters had to do was substitute "insured for" instead of "worth" or "valued at" and the reader would be fully informed as to the basis at which it was derived and could form their own conclusions. But I guess that would not be sufficiently sensational. Quote Link to comment Share on other sites More sharing options...
mike777 Posted November 13, 2011 Report Share Posted November 13, 2011 What is your question? What is art and what is its value? btw I think it is easy to confuse value and price if that is your question. Price is something I know how to measure. Value is something I love to debate. ditto 1 Quote Link to comment Share on other sites More sharing options...
1eyedjack Posted November 13, 2011 Author Report Share Posted November 13, 2011 No question, beyond the rhetorical. Quote Link to comment Share on other sites More sharing options...
mike777 Posted November 13, 2011 Report Share Posted November 13, 2011 Price acts as a discovery device. The purpose is to give us a better measurement. Not a perfect one. The problem becomes when governments distort price discovery. The more distortion or debate over distortion the more they need to hire...well me. If everyone knows the true price vs value debate...well you wipe out finance... Quote Link to comment Share on other sites More sharing options...
1eyedjack Posted November 13, 2011 Author Report Share Posted November 13, 2011 Within limits, perhaps. But if I offer for sale an item of crap for $1m, and get no takers, I "discover" very little beyond that which I already suspected. Quote Link to comment Share on other sites More sharing options...
mike777 Posted November 13, 2011 Report Share Posted November 13, 2011 Within limits, perhaps. But if I offer for sale an item of crap for $1m, and get no takers, I "discover" very little beyond that which I already suspected. so price has some value in your example...excellent not perfect but a real value. Quote Link to comment Share on other sites More sharing options...
1eyedjack Posted November 13, 2011 Author Report Share Posted November 13, 2011 I disguish between price having a value, and the object being priced having a value. Price has a potential value in that it fixes an amount which a willing seller would accept, if offerred. Which is a big if, and only half of the exercise in determine the value of the object. In the vanishingly unlikely event that someone were actually to offer me $1m for my piece of crap, I would bite their hand off at the wrist. The fact that there is a finite possibility of such an event is information that you consider to be of value in and of itself. The fact that that finite possibility is vanishingly unlikely leads me to place a correspondingly vanishingly small value on that information. In the limit, it is, in effect, valueless as information goes. So we shall have to agree to differ as to whether my placing a pricetag of $1m on my crap is in reality information of any worth. It seems that I have touched a nerve. I was going to ask if you were in the industry, but it seems from the above that you are. Quote Link to comment Share on other sites More sharing options...
mike777 Posted November 13, 2011 Report Share Posted November 13, 2011 I disguish between price having a value, and the object being priced having a value. Price has a potential value in that it fixes an amount which a willing seller would accept, if offerred. Which is a big if, and only half of the exercise in determine the value of the object. In the vanishingly unlikely event that someone were actually to offer me $1m for my piece of crap, I would bite their hand off at the wrist. The fact that there is a finite possibility of such an event is information that you consider to be of value in and of itself. The fact that that finite possibility is vanishingly unlikely leads me to place a correspondingly vanishingly small value on that information. In the limit, it is, in effect, valueless as information goes. So we shall have to agree to differ as to whether my placing a pricetag of $1m on my crap is in reality information of any worth. It seems that I have touched a nerve. I was going to ask if you were in the industry, but it seems from the above that you are. based just on your posts ...you have no idea. words have meaning.. based on your posts you have no idea what price means. for starters I would suggest you back up and really dig deep really deep onh what the word price means. With that said I will say bye. Quote Link to comment Share on other sites More sharing options...
1eyedjack Posted November 13, 2011 Author Report Share Posted November 13, 2011 words have meaning..[/Quote]Some dobased on your posts you have no idea what price means.[/Quote]But apparently not allfor starters I would suggest you back up and really dig deep really deep onh what the word price means.For starters I would suggest that you back up and really dig deep on whether in your several posts you have made any point at all Quote Link to comment Share on other sites More sharing options...
gwnn Posted November 13, 2011 Report Share Posted November 13, 2011 would you prefer 'invaluable piece of art'? people like numbers (despite popular belief). Quote Link to comment Share on other sites More sharing options...
PassedOut Posted November 13, 2011 Report Share Posted November 13, 2011 So we shall have to agree to differ as to whether my placing a pricetag of $1m on my crap is in reality information of any worth.Reminds me of this: Merda d'artista 1961 Manzoni's decision to value his excrement on a par with the price of gold made clear reference to the tradition of the artist as alchemist already forged by Marcel Duchamp and Yves Klein among others.Piero Manzoni In the following years, the cans have spread to various art collections all over the world and netted large prices, far outstripping inflation. The most recent can to be auctioned sold on 26 February 2007 in the USA for $80,000.No doubt a solid investment for these troubled times... B-) Quote Link to comment Share on other sites More sharing options...
barmar Posted November 14, 2011 Report Share Posted November 14, 2011 Going by the definition you quoted, an item that has never been offered for sale has no value, which is obviously nonsensical. In contexts such as the quoted article, what they presumably mean is "estimated value". It also presumes perfect knowledge and rational participants in the market. It's hard to reconcile that with art, which has no intrinsic value and is affected by esthetics, style, opinions, etc. Different buyers and sellers can reasonably disagree on the value of a piece of art at any particular time (and it's quite common for it to change over time). Buyers and sellers have different biases when setting the price they're willing to accept. Quote Link to comment Share on other sites More sharing options...
phil_20686 Posted November 14, 2011 Report Share Posted November 14, 2011 art, which has no intrinsic value Oh dear, now its going to kick off. Firstly, what is "intrinsic value"? After all, "money" is the very definition of something which has no intrinsic value, and yet it is apparently the method of choice for "valuing" things which do have "intrinsic (economic) value". Further, a large number of philosophers would argue that the things which have "real value" are precisely those things which cannot be bought - friendship, love, loyalty, etc, and many would include in this art since it "uplifts the human spirit". Finally, your comments seem to imply that there is no objective valuation of `beauty', which in itself is a contentious statement. To my mind one talks of taste when comparing a Monet with a Micheal Angelo. To presume that cultural factors are all that separate the finger paintings of a three year old from the works of master painters is beyond deluded imo. 1 Quote Link to comment Share on other sites More sharing options...
kenberg Posted November 14, 2011 Report Share Posted November 14, 2011 As a child I was told that a cynic is someone who knows the price of everything and the value of nothing. That's one way of thinking of the difference between price and value. Now about worth. It seems common to say: That watch, car, tv, whatever is priced at x dollars but is it worth it? Do we get out money's worth? What I get from thinking this over is that price is objective: Something is priced at $100. Worth is subjective. A vente coffee at Starbucks is priced at about $2.20. I pay it, but often I think I am an idiot for doing so. So the price is $2.20, no question about that, and it is right on the border of being worth it for me. Not at all worth it for others. Back to your painting. Sure, journalists are careless with words. You just now noticed? If something doubles in price it seems to be tough for them to decide if the price has gone up 100% or 200%. And anything that is increasing rapidly is undergoing exponential growth. My wife heard some radio guy talking of logarithmic increase. He made no sense at all. I guess he heard that logarithms have something to do with exponentials and thought he would be first with new phrasing. Yes, "insured for" would have been better. I suspect few of us think any of these paintings are worth the price. They are like gold. People pay large sums because they think someone else will pay even more later on. Houses, for a while, were priced the same way. 1 Quote Link to comment Share on other sites More sharing options...
phil_20686 Posted November 14, 2011 Report Share Posted November 14, 2011 Its interesting to look at the price of say, an original model-T. It got cheaper as we learned to make better cars cheaper, and then it gets more expensive as there are fewer of them and they have rarity/historical value. To understand this one need only note that there are only a few people who will buy any item for its historical value, as long as there are more of this item than there are people who want it, there is no (significant) change to the price. As the items are destroyed by time the price starts to rise as it is dominated at the margin by people who are buying it for its historical value rather than its functionality. A similar thing happens with art, since tends to be unique, it is dominated at the margin by the person who is prepared to pay most for it, in this case the price mechanism effectively fails to function. In order for the price mechanism to function effectively you need to have a large number of trades so that people are effectively always able ot get what they want at some price. See for example the divergence from fair value of illiquid stocks compared to liquid stocks. Quote Link to comment Share on other sites More sharing options...
gwnn Posted November 14, 2011 Report Share Posted November 14, 2011 My dad always says "it is worth as much as it can be sold for". What other definition is better? Some sort of moral judgement? I read all the posts here but I am confused. I think if I read them again, more carefully, I will only get more confused. 1 Quote Link to comment Share on other sites More sharing options...
y66 Posted November 14, 2011 Report Share Posted November 14, 2011 Agree with OP that "insured at" is much clearer than "worth" and that before and after images would have been nice. Quote Link to comment Share on other sites More sharing options...
blackshoe Posted November 14, 2011 Report Share Posted November 14, 2011 Value (or "worth") is subjective, as Ken pointed out. His $2.20 coffee is worth close to nothing to me, because I don't like coffee. Price, on the other hand, is objective. Ken's coffee is priced at $2.20 because enough people are willing to pay that price. In theory, in a free market, all prices are negotiable - Ken could tell the clerk in Starbucks "I'll only pay $1.80 for that". The problem is we've moved away from a free market in that merchants set a price, and most people just pay it (or not). The very idea of negotiating seems to have died out. BTW, the verb "to value" means "to estimate the monetary worth of", which means, basically to decide what price you're willing to pay or accept for it. So value and price are connected, but they're most certainly not the same thing. 1 Quote Link to comment Share on other sites More sharing options...
phil_20686 Posted November 14, 2011 Report Share Posted November 14, 2011 My dad always says "it is worth as much as it can be sold for". What other definition is better? Some sort of moral judgement? I read all the posts here but I am confused. I think if I read them again, more carefully, I will only get more confused. Its a very empiricist perspective to say that a narrow definition that can be measured is better than a fuller definition that cannot be. The inability to assign an accurate number to the worth or value of something in the same way as one can give a price is not a weakness, merely an acceptance of the limits of human knowledge. In order to see the weakness of the empiricist perspective one need only look at the inane attempts of social scientists to measure "happiness" in a society, not to mention attempts to measure "love". Humans being what we are, the same painting to the same person can be more or less appreciated depending on what day of the week it is, it is inane to suppose that this means that the "value" of the painting has changed. The strongest correlation in happiness surveys is with the weather on the day they were taken. The results can be changed by reordering the questions. Nevertheless in the current climate we have a tendency to assign worth so things that are measurable, and to avoid assigning value to intangible things. It is a dangerous tendency because it blinds one to the importance of intangibles in the real world. 1 Quote Link to comment Share on other sites More sharing options...
gwnn Posted November 14, 2011 Report Share Posted November 14, 2011 Sure enough, in general it is wrong to assert something that simplistic ("as long as you can't give me a better definition, mine is true, so there!"). However, in this particular case I don't feel my father's definition (of course it's not just his) is overly inaccurate/heartless/inane. And I honestly don't understand why it's shocking that worth would change over time. Why wouldn't it? 1 Quote Link to comment Share on other sites More sharing options...
PassedOut Posted November 14, 2011 Report Share Posted November 14, 2011 Humans being what we are, the same painting to the same person can be more or less appreciated depending on what day of the week it is...Certainly true, but how do you square this with the "objective valuation of 'beauty'" you mentioned earlier? Quote Link to comment Share on other sites More sharing options...
phil_20686 Posted November 14, 2011 Report Share Posted November 14, 2011 Sure enough, in general it is wrong to assert something that simplistic ("as long as you can't give me a better definition, mine is true, so there!"). However, in this particular case I don't feel my father's definition (of course it's not just his) is overly inaccurate/heartless/inane. And I honestly don't understand why it's shocking that worth would change over time. Why wouldn't it? Because surely a better definition of the worth of a thing is the sum of all the use/pleasure etc that one gets from it over its entire existence, which is fixed. The price might measure the use I will get from it in some finite time. @Passed out: Easily, for humans are not generally objective, The best that can be said is that we are sometimes capable of objectivity if we should put our mind to it. Suppose I answer you in another question: Is it rational for a blind person to conclude that all paintings are worthless? Quote Link to comment Share on other sites More sharing options...
PassedOut Posted November 14, 2011 Report Share Posted November 14, 2011 @Passed out: Easily, for humans are not generally objective, The best that can be said is that we are sometimes capable of objectivity if we should put our mind to it. Suppose I answer you in another question: Is it rational for a blind person to conclude that all paintings are worthless?Of course not. My question goes to the subjective/objective distinction. Granted that humans are "sometimes capable of objectivity if we should put our mind to it." But even if we put our minds to it, how can we say objectively that, for example, a meadow of flowers is more beautiful than a sunset? Quote Link to comment Share on other sites More sharing options...
gwnn Posted November 14, 2011 Report Share Posted November 14, 2011 Because surely a better definition of the worth of a thing is the sum of all the use/pleasure etc that one gets from it over its entire existence, which is fixed. Could you explain why? I am trying to understand what makes you this sure, but I can't. I guess I am closed minded but I like attributes to have a meaning in a certain moment of time, not just integrated over all of time (if you excuse my mathematical language). Quote Link to comment Share on other sites More sharing options...
barmar Posted November 15, 2011 Report Share Posted November 15, 2011 Sure enough, in general it is wrong to assert something that simplistic ("as long as you can't give me a better definition, mine is true, so there!"). However, in this particular case I don't feel my father's definition (of course it's not just his) is overly inaccurate/heartless/inane. And I honestly don't understand why it's shocking that worth would change over time. Why wouldn't it?It may be accurate, but is it a useful definition? It means that the only way to find out the value of something is to try to sell it. As I said above, what does this mean for things you're not willing to part with? How can we appraise things before we put them up for sale, or if we just want to purchase insurance for them? Must we go through the motions of trying to sell them, and then when you get the buyer to agree on a price tell them you've changed your mind? In many cases you can approximate the value by looking at sales of similar items -- that's what home appraisers use as their starting point. But what do you do for unique items? And there are still many subjective qualities. An heirloom will have very different value for family members than others. But family members might expect you to cut them a deal (maybe even give it to them for free) based on the relationship. Quote Link to comment Share on other sites More sharing options...
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