[1eyedjack]

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.

[mike777]

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

[1eyedjack]

No question, beyond the rhetorical.

[mike777]

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...

[1eyedjack]

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.

[mike777]

1eyedjack, on 2011-November-13, 01:47, said:

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.

[1eyedjack]

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.

[mike777]

1eyedjack, on 2011-November-13, 02:13, said:

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.

[1eyedjack]

mike777, on 2011-November-13, 03:17, said:

words have meaning..

Some do

mike777, on 2011-November-13, 03:17, said:

based on your posts you have no idea what price means.

But apparently not all

mike777, on 2011-November-13, 03:17, said:

for 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

[gwnn]

would you prefer 'invaluable piece of art'? people like numbers (despite popular belief).

[PassedOut]

1eyedjack, on 2011-November-13, 02:13, said:

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

Quote

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

Quote

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...

[barmar]

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.

[phil_20686]

barmar, on 2011-November-13, 23:03, said:

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.

[kenberg]

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.

[phil_20686]

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.

[gwnn]

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.

[y66]

Agree with OP that "insured at" is much clearer than "worth" and that before and after images would have been nice.

[blackshoe]

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.

[phil_20686]

gwnn, on 2011-November-14, 07:28, said:

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.

[gwnn]

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?