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Measuring Value

12/26/2015

Economics is about the allocation of our limited supply of resources among the unlimited demands for those resources.  Idle resources are viewed as unacceptable, if not downright sinful.  Idle resources are no different than wasted resources.

That makes Christmas and other holidays difficult for economists to understand.  Look at all those man-hours of labor that are gone – forever!  The old adage about “idle hands being the devil’s tools” rings so true to economists, not from a moral viewpoint but from an economic viewpoint.  Idle hands are wasted labor.

In addition, people should be out there buying stuff or consuming products, which contributes to gross domestic product.  Plus, numerous economic studies have shown us that gift-giving produces a very inefficient allocation of resources.  Recipients of gifts would spend their own money more efficiently, if they were spending their own cash.  It is just hard to justify the holiday concept to economists.

The problem with economists is their reliance only on those things that can be measured.  The joy of watching a kid who believes Santa just left their home . . . cannot be measured and is therefore not part of the gross domestic product.  A baby’s smile makes no contribution to GDP either.  Holding the hand of a loved one on their deathbed also has no economic value.  Waking up, snuggled against your gently-sleeping spouse, is just another example of waste.

Some non-economists argue that, if the economic value of something can be measured, then it has no real value.

Maybe, they’re right?

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