What is Value?

In Business School, Life on March 17, 2011 by thebetweenthoughts

Before business school, I thought I knew what the word “value” meant.  Value was how much something was worth to you.  Sometimes it was measured in dollar signs, but more often it was the general sense of satisfaction associated with an object or an experience.  I never really thought about quantifying that feeling.  Value was more of a binary question for me – either it existed or it did not.

Business school has essentially been a dissection of value.  But value only in the financial and business sense – firm value, customer value, shareholder value, value proposition, enterprise value, etc.  On the surface, this seems like the best definition of the term.  The end measurement, a monetary denomination, is clearly understood and is comparable across different subjects.  The process to obtain the measurement also seems clear and unambiguous – calculate the future cash flows of an asset and discount that amount by a risk-adjusted rate.  This superficial clarity is why this version of value seems to dominate all aspects of our lives.

As finance has come to dominate our economy, so has its theorems and ideals come to dominate our cultural mores.  Our value as human beings has been reduced to only being a product of what we can contribute (monetarily) in the future.  We readily accept this contract too.  When we’re offered a salary at a new job, they’re paying the monetary amount they believe they can extract from us discounted for time, productivity and attrition.  Our contributions to the firm can be expressed in the $50,000, $80,000 or $150,000 salary that is written on that offer sheet.  No more, no less.  Because work has become the dominant part of our lives, salary has become our only tangible measurement for value.  We have lost the ability to assess and respectfully accept any other forms of value.  How often have you met someone at a bar who sizes you up based on your job and title?  Did they care about your intelligence?  Maybe.  Did they care about your artistic aspirations?  Only if they were profitable.  Did they care about your sense of humor?  Probably not.

[Random aside about social returns – when we donate money to a cause, what are the expected returns?  Is the value solely derived from the act of giving?  Do we need to see the tangible outcomes of our dollars?  Do we view donations in the same way we vie w equity holdings?  If we don’t, why not?]

As I mentioned before, monetary measurement is easily understood and simple.  But it’s too simple.  By reducing people to dollar signs, we prevent ourselves from understanding the complete picture of value.  We can consciously change this though.  We all recognize the shallowness of viewing value in this form.  What is more difficult is shaking ourselves of the concept of “future contributions” when we value someone.

When a parent looks at her two children – one “destined” for success, the other destined for a life more mundane – does she unconsciously value them differently?  Will she shower one with more love, more attention?

Do we value friendships based on the future social returns?  Late night chats on the phone, holding your hair back when you puke, someone to play video games with.

When we look at someone, do we even care who they are at that moment?  Or are we only concerned with how they can contribute to our lives in the future?  Do we care about what they did yesterday, or only what they could do tomorrow?

If we have no value in the present, then does that mean our existence is meaningless?   Our value is based on what our potential is, not who we actually are.  The here and now doesn’t matter anymore.

It’s easy to casually disagree with these statements.  But think about the people around you, can you actually seem them for who they are?  Or do you start to think about the next time you’re having a drink with them?  The next time you’re going to call them and ask for advice.  The next time you’re playing basketball with them.  It’s all about next time.  We don’t know how to think about the present anymore.  We don’t know how to enjoy the present anymore.

[Random aside about this blog: For those of you unfamiliar with my writing, I tend to ask questions without ever answering them.  I guess this is my own way of succumbing to the fallacy of the future.  Questions are just contemplations on the future.  I shy away from declarative statements because they seem so permanent.  A question can hang in the air unanswered forever.  Once a statement is made, an opinion has been staked into the ground.]

So, what is value?  I’ve (hopefully) undermined the application of the financial definition to other aspects of life.  [I didn’t even go into why the financial definition is a shaky one even in financial terms.]  So then, how are we supposed to measure and assess the experiences in our life?  What methods and metrics are appropriate?  How do we know if a friend, an outing or a lover is valuable?



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