The paradox of value is the apparent contradiction that, although water is on the whole more useful, in terms of survival, than diamonds, diamonds command a higher price in the market. paradox of value
Yes my dear Dr Nazar Alqahwachi,
I salute your point. Great thinking!
Water-Diamond paradox!
In explaining the diamond-water paradox, marginalists explain that it is not the total usefulness of diamonds or water that determines price, but the usefulness of each unit of water or diamonds. It is true that the total utility of water to people is tremendous, because they need it to survive. However, since water is in such large supply in the world, the marginal utility of water is low. In other words, each additional unit of water that becomes available can be applied to less urgent uses as more urgent uses for water are satisfied.
Therefore, any particular unit of water becomes worth less to people as the supply of water increases. On the other hand, diamonds are in much lower supply. They are of such low supply that the usefulness of one additional diamond is greater than the usefulness of one additional glass of water, which is in abundant supply. Thus, diamonds are worth more to people. Therefore, those who want diamonds are willing to pay a higher price for one diamond than for one glass of water, and sellers of diamonds ask a price for one diamond that is higher than for one glass of water.
Conversely, a man dying of thirst in a desert would have greater marginal use for water than for diamonds so would pay more for water, perhaps up to the point at which he was no longer dying...
https://en.wikipedia.org/wiki/Paradox_of_value
Dr. Amit Baran Sharangi : I give you my great respect and appreciation for you.
Dear Professor Ljubomir Jacić :We're used to your wonderful contributions, and this is one of them, thank you for clarifying the idea and the beautiful addition by you.
The price of diamonds is in fact dictated by companies that trade them worldwide. Diamonds value is artificially boosted by cartels and doesnt present its actual value. We should also mention that the cartels have conducted an excellent marketing on diamonds- being a lady's best friend. To depict this let us say that we decide to buy an engagement diamond ring for our lady, we pay 10k $ for it,once we leave the facility its price depriciates by 9/10 because its actual value is artificial,it is simply due to good marketing and high demand that diamonds are valuable, especially since its merely pieces of glass.On the other hand water is scarce and its value will rise in the years to come, knowing that such a valuable resource is so valuable for our living, and due to polution many nations have problems with its purity.
I find this the diamond-water paradox quite interesting and it leads to an never-ending discussion.
As a human I can say that I fully agree with the author of this citation:
"When the last tree is cut, the last river poisoned, and the last fish dead, we will discover that we can’t eat money." In this case diamonds.
Dear Ivana (Gujanica) Radojević :
A smart answer, it indicates wisdom.
https://uk.yahoo.com/news/australia-more-10-000-camels-105000922.html
provides a reminder to the need to put the value comparison in context.
Depending on the use case, you will value water more than diamond as above (10 000 camels cost a lot), or less (a life-changing present, a precision cutting tool, etc)
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