This issue of price and corresponding value comes up a lot in our society, such as in education. We all have read countless surveys and documents that show how the amount of average salary increases with more years of education and degrees. But, is there more to just getting accepted to the college? In one instance, a mother chose to send a daughter to more affordable state university than more expensive and prestigious New York University so that the daughter can finish the education and be debt-free. Mother in the article explained, “It’s like shopping at Loehmann’s vs. Bloomingdale’s. I’m teaching my daughter to be a good shopper and to pick value.”1
In another case also involving NYU, a woman graduated recently with student loan debt of $100,000. Despite her interdisciplinary degree in religious and women’s studies, she is struggling to make a living, not to mention paying for the debts. Her mother spoke of this situation, “All I could see was college, and a good college and how proud I was of her [daughter].”2
On the other hand, there are cases that prices match the values of spending that people make. Ebay, Amazon, and Craigslist are becoming more popular for people to buy used items. But, they are also rife with buyers’ complaints. In fact, a blogger Saul Hansell spoke of causes of complaints like irking customer services, listing of illegal items that violate copyrights, and the overall poor business models as the critical problems of Ebay.3
Let’s pause and ask the buyers this question though: how much did you pay compared to the price listed in the stores? I know that personally, I have bought a couple of textbooks from Ebay that would have otherwise cost me substantially more. Are they in the conditions that I expected? For the most part, yes, in the prices I paid. Too many people converse about the poor quality of items from Ebay but they failed to see that when they are purchasing used item at a lower price, they cannot expect same level of high quality. In a common proverb, you get what you pay for.
Then, what is the judge for determining if the price meets the values? I think that the answer is by comparing the changes that the purchase has brought to the expectations. With the discussion about the education, if someone paid large amount of money to graduate without a stable job, then the price for the education may not necessarily suit the values. On the other hand, if a Bachelor’s Degree in Economics in private college allowed the person to receive an internship at one of most prestigious firms in the Financial District of Manhattan, then the price that the person paid was an accurate measure of the value.
This connection between expectation and changes must be realistic. In other words, the person who just received a Bachelor’s Degree in Economics cannot expect to find a millionaire job. Think about realistic expectation with farming. A farmer cannot expect to increase the overall profits by ten times through simply purchasing new John Deere tractors. A reasonable expectation would be an increased amount of harvest and more accessibility to the markets than before. The difference between two expectations is that in the first expectation, the farmer already has set the level of outcomes that the purchases should bring. The second expectation, on the other hand, is more general and focuses on the improvements.
Also, the $10 purchases from Amazon, Ebay, and Craigslist should allow the person to have about $10 overall improvement in situations than before. Expecting a net gain worth of $100 is unrealistic because this is too “detailed” to be general. It is possible that the purchases may bring the values worth of $100 in some cases. But, there is no way to know that, so it is wrong to assume this and later complain that the item’s price did not necessarily reflect the “expected” value.
1 “Weighing Price and Value When Picking a College” by Sue Shellenbarger. The Wall Street Journal. July 16, 2009.
2 “Placing the Blame as Students Are Buried in Debt” by Ron Lieber. The New York Times. May 28, 2010.
3 “The Depth of eBay’s Problems 1: Disappointed Buyers” by Saul Hansell. The New York Times. December 17, 2007. http://bits.blogs.nytimes.com/2007/12/17/the-depth-of-ebays-problems-1-disappointed-buyers/>