Standards of Value: Theory and Applications, 2nd Edition

CHAPTER 1

Common Standards and Premises of Value

COMMON STANDARDS AND PREMISES

In this chapter, we provide a brief introduction to the standards of value that we discuss and analyze throughout this book. The premises and standards discussed in this chapter will be discussed in more detail in the upcoming chapters.

We begin by analyzing the meaning of value itself and why it is necessary to understand the elements of each standard of value. We also introduce two fundamental premises of value: value in exchange and value to the holder. Then we briefly address how these premises of value impact the standard of value and the assumptions that underlie any given standard of value.

Price, Value, and Cost

Oscar Wilde wrote:

What is a cynic? A man who knows the price of everything and the value of nothing.1

Wilde's quote illuminates the relationship between price and value as social concepts, highlighting clearly that the words are not interchangeable. Although not interchangeable, in various reference works, price, value, and cost are all defined with reference to one another.

Price, for example, is defined by Webster's New World Dictionary as “the amount of money, etc., asked or paid for something; cost. 2. Value or worth. 3. The cost, as in life, labor, etc. of obtaining some benefit.”2 Black's Law Dictionary defines price as “the amount of money or other consideration asked for or given in exchange for something else. The cost at which something is bought or sold.”3

Webster's defines ...