Steve McEllistrem

The Devereaux Dilemma

Understanding Value

The other day, shortly after I finished reading a biography on Vincent van Gogh’s life, I was chatting with my friend Jack about it and I mentioned how strange it seemed to me that van Gogh’s works had become so popular, so expensive, when they appeared to be not particularly well done.

He never seemed able to master the painting of people, not like Leonardo da Vinci, anyway, who brilliantly captured form and movement, working at a level of detail van Gogh simply couldn’t match.

Jack then brought up Pablo Picasso and said he couldn’t understand how Picasso’s cubist works had become so expensive when they were so far from depicting reality. All this got me to thinking about value and its subjective nature.

It makes sense that we assign value to things that are rare – gold, platinum, even silver. When items are difficult to obtain, people of wealth and power want to possess them to demonstrate to the world their success.

History shows that many rare things have been used as currency, including shells, salt and leaves (tobacco and tea, e.g.). One reason certain works of art can hold great value is because of their rarity. But Picasso produced many thousands of pieces while a lot of talented artists produced many fewer pieces, so their work ought to be worth at least as much as his if we use that as the sole criterion.

Obviously, we don’t.

There’s also a subjective element at play. Some group of people decided at some point in time that works by Picasso and van Gogh were of great value. Those views were agreed upon by more people and still more people until enough folks decided that they were valuable, at which point their value soared.

This same dynamic plays out with every product, be it an iPod or a cashmere sweater. Yes, there are inherent costs to producing these products, but there are many instances in history when someone thought to create a great new item that was expensive to produce and failed when the market rejected it – see, for example, the Edsel.

So the cost of producing an item does not correlate that closely with its ultimate value. What determines anything’s value is the group mind, which either pushes the number down or raises it up. That group mind moves with new information and new tastes, sometimes making things that once were valuable practically worthless and vice versa.

And it’s not just products. Look at the Oscars. Every year there’s a dispute over films that should or should not have been included, or actors who should have won but didn’t. Awards are extremely subjective. Even our collective perception of a movie changes over time. Some that were considered classics in their time are now dismissed; others, dismissed in their time, now revered.

That doesn’t mean values are meaningless, but it does mean that we get to assign our own value to anything. If we like something and are willing to pay a lot for it, that’s okay. And if we don’t like something and would never buy it no matter how much others rave about it, that’s fine too. You get to pick your own treasures.

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