Saturday, July 7, 2007

Money and Value

One of the things I like about this blog is that it gives me an opportunity to present topics that would, essentially, be a digression in my other blog.

For the Atheist Ethicist blog for tonight I am working on an essay on the relationship between biology and value, in a desire-utilitarian context. My starting point is an article in The Economist, “Money Isn’t Everything”.

The article starts with the following paragraph:

PSYCHOLOGISTS have known for a long time that economists are wrong. Most economists—at least, those of the classical persuasion—believe that any financial gain, however small, is worth having. But psychologists know this is not true. They know because of the ultimatum game, the outcome of which is often the rejection of free money.

What a load of hogwash!

No economist has ever said that money is everything. In fact, money is a medium of exchange and has value only in virtue of what a person can do with it. A $20 bill is only so much paper and ink. What gives it value is the fact that one can give it up for something else that does have value - food, clothing, shelter, chocolate, more chocolate.

And as for "free money" - economists are the ones who invented the phrase, "There ain't no such thing as free money." The article in which this this quote appears is an article about making choices, and simply points out that an individual will give up money in exchange for other 'goods'. This is hardly a surprising result.

What surprises me most is that such an obviously flawed paragraph would show up as the opening paragraph in an article in "The Economist."

In this context, the paragraph goes from being simply wrong to laugh-out-loud absurd.

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