A Balanced/Rational View of Value
Posted: 02 October 2007 12:31 AM   [ Ignore ]
Total Posts:  112
Joined  2007-09-16

This may be stating the obvious but, I’d like to suggest that for any balanced/rational/non-bias/fair/etc view of value has to be the result of the subtraction of any and all costs (including externalities) from the total perceived value gained by an action/system/policy/product/organization/etc.

Basically, Net Value = Total Gained Value minus Total Value Lost (costs)

A few notes:
1) All Value is Subjective
  a) and varies between individuals
  i) thus in economics you get ‘demand curves’.
  b) Value can only be ‘valued’ by humans
  i) Value is a result of a prediction, and not the result of expectation, though many predictions are based on a person’s expectation
  ii) Animals are only capable of prediction based on expectation, and not able to deduce.
  iii) Value that is based on accurate deduction, is more accurate than value based on accurate expectation.
2) The probability for Externalities increase as the size of the sampled group of the individuals polled decreases.
  a) all surveys must be randomized to be statistically valid
3) Costs can also be expressed as lost value, or decreases in Predicted Value.
4) The Total Predicted Value to a group of individuals is equal to the Total Value predicted by each Individual in the group summed together.
5) The Total Predicted Cost to a group of individuals is equal to the Total Decreases in Value Predicted by each individual in the grouped summed together.
6) People experience decreases in Value when they change their Calculation of Predicted Value
7) Calculations of Net Value are only valid until any individual in the group changes their Predicted Gained Value, or Predicted Lost Value.
8) Individuals have a tendency to overestimate Predicted value.
i) This prediction gets updated as the individual experiences the value.
9) Individuals have a tough time aggregating costs.
i) accurate record keeping helps, but individuals rarely review records even when they are kept.
ii) they also rarely keep records in a way that facilitates future predictions of Value.

Ok, the above is a little sloppy, so feel free to clean it up as you’d like….
That said, I wanted to put a straw-man argument for value up, so that we had a basic framework to test or detest.

Now, my concern. 

My concern comes in that most ‘Calls for Action’ that I see, either on the Internet, or in the News, or on TV, or where ever you see Calls to Action, rarely, if ever contain rational/balanced predictions of Net Value.

Common mistakes, include
1) Assuming that the value gained by all individuals is equal to the value gained by any individual.
2) False correlations
3) non-Random surveys
4) over emphasizing either the Gained Value or the Lost Value side of the equation
5) over/under attributing externalities
etc, etc, etc.

I think we all know this…..

So, here’s a question…

1) How often do you think people point out that a ‘Call for Action’ is not based on a valid calculation of Value?
2) When people prefer an Action, do you think this decreases the probability that they will point this out?
3) Do you think that the relative strength of a person’s opinion about an action, increases the probability that they skew the value that they communicate about the action?
4) If we want to increase the ‘Use of Reason’ that people employ when making decisions, how do we best do so?



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The simple bare necessities
Forget about your worries and your strife
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Old Mother Nature’s recipes
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