Value Is Not the Same as Price
Value is the worth of something. Economics distinguishes value from price, and the difference is a very old puzzle.
Value is the worth, usefulness or importance of something. Adam Smith framed the classic puzzle in 1776: water is essential to life yet nearly free, while diamonds are useless yet expensive. The *paradox of value* was resolved a century later by marginal utility — what matters is not total usefulness but the worth of one more unit, and one more litre of water is worth very little where water is plentiful. In the plural, *values* means principles rather than prices.
- Worth. *Good value.*
- Principles. *Family values.*
- A numerical quantity. *The value of x.*
- To esteem. *I value your advice.*
- Latin — *valere*, to be worth. *The source.*
Word forms
| Form | Word | Example |
|---|---|---|
| Noun | value | Value. |
| Plural | values | Values. |
| Verb | value | Value it. |
| Adjective | valuable | Valuable. |
| Noun | valuation | A valuation. |
- The house rose in value.Worth.
- It conflicts with our values.Principles.
- Water is cheap but essential.Paradox.
The paradox of value
- Water is essential yet costs almost nothing
- Diamonds are useless yet cost a great deal
- Smith posed the puzzle in The Wealth of Nations, 1776
- Marginal utility solved it in the 1870s
- The insight: price reflects the worth of one more unit, not of the whole supply
Old French *value*, worth, the past participle of *valoir*, from Latin *valere*, to be worth.
What is the paradox of value?
That water is essential yet cheap while diamonds are useless yet costly. Marginal utility resolved it: price reflects the worth of one additional unit.
What is the difference between value and price?
Price is what is paid; value is what something is worth to the holder. The two can differ widely.