This week I discovered one benefit to this experiment. In planning for my course this semester, I’ve spent a lot of effort reducing what I “cover” in class. This week I had the opportunity to add some material that I haven’t been able to teach in a while. We had a mini-discussion (less than a full class period) on several issues:
â€¢ What is value? (One’s subjective judgment of what something is worth.)
â€¢ What determines value? (Tastes and Preferences, assumed exogenous and stable at least until next semester when we explore advertising.)
â€¢ How does the market price differ from value? (The market price is the consensus view of market participants about what something is worth.)
â€¢ How might market prices not adequately reflect social value? (Market prices don’t reflect the values of folks who don’t participate in the market because they lack the ability to pay. Market prices can be biased by people with strong preferences in favor of some item and with great ability to pay. This might explain the apparent difference between the value to society of teachers and nurses relative to their incomes, or the extraordinarily high incomes of professional athletes.)
This was one of those discussions that addresses complex yet important ideas that often get left out of traditional text coverage, since the ambiguity makes them difficult to handle precisely.
I look forward to adding additional interesting topics later in the course.