The nature of value: differing paradigms

Perhaps the most often quoted definition of an economist is of someone who knows the price of everything and the value of nothing. However, it is an awareness of the distinction between value and price which separates out the true economist from the glorified book-keepers and accountants who so often masquerade under such a title. Recent years have seen a growth of badge-engineering in which so-called new disciplines such as environmental or ecological economics have risen to prominence. However, whilst these are appealing titles, in essence they represent not a radical departure but rather a very welcome return to the basic principles and domain of economics – the analysis of true value.

It is one of these basic principles which underpins this study: namely the assumption that values can be measured by the preferences of individuals. The interaction of preferences with the various services provided by a commodity generates a variety of values. Many economists have studied the nature of these values; however, a useful starting point is the concept of aggregate or total economic value (TEV) (Pearce and Turner, 1990; Turner, 1999; Fromm, 2000).

Figure 1.1 shows how TEV can be broken down into its constituent parts and illustrates these with reference to some of the values generated by the principal commodity under consideration in this study; woodland.

The bulk of economic analyses concentrate upon the instrumental or use values of a commodity.