Why do we place such high value to things such as gold and diamonds? Wouldn’t it make sense to put that value on things that are more “useful”?
In: Economics
There’s absolute no reason except collective imaginary and that’s how capitalism work, making you believe that an inhert stone is more valuable than your own time and make you volunteer slave so you can afford it. Also gold has at least industrial usage, dollar is just paper printed by some entity backed by nothing and people kill for it.
If it’s useless but has value, then the value is just imaginary.
A bunch of answers not really going after the real reason. Generally today economists use what’s called the marginal theory of value to explain prices. So the price for something is how much someone is willing to pay for one more of them. Useful things like water tend to be cheap because people have a lot of them so they don’t need a little bit more. Diamonds or gold are expensive because there isn’t much of them and so people will pay a lot for one more. Obviously, people have to want the stuff for this to work, but why people want things is pretty complicated and not really an objective question.
Both are valuable due to scarcity. Diamonds are scarce because DeBeers has complete control over the market. Gold is scarce because it’s really fucking rare. We think she see gold everywhere, but if we’re able to take all the gold ever found on earth and bring it to one place, it would fill an Olympic size swimming pool more or less. That’s it. Over thousands of years of human history and gold mining, all we have to show for it is that relatively small amount. There’s just not much of it, and that scarcity is what makes it valuable.
That would be logical, wouldn’t it? Unfortunately we place value on them because they are not useful, ie their only value is vanity.
“I will give you all of my gold for all of your iron.”
Yes, gold is useless in most applications. But it doesn’t corrode under natural conditions, it’s easy to recognize, easy to form, and is rare enough that you don’t have to worry too much about extra entering your economy and crashing it. Because there’s unlikely to be extra amounts brought in and unlikely to be used for other purposes than currency, it means you can have a decently regulated economy.
We put value on a more useful things as well. For example knowledge, like you learn or study and then get paid for that. But if somebody hit you in a head real hard you better have some gold or diamonds
I feel like we do this a lot as a society. Why do we place high value on jobs like athletics and actors instead of on jobs that are useful to society such as teachers, first responders and social workers?
Gold is the key one here. Why is gold valuable? Three factors come together: it’s pretty, which drives demand for jewelry, etc. It’s scarce but not _too_ scarce : demand can easily outpace supply, but there’s enough for everyone to know what it is and for it to have cultural significance. It’s inert: it doesn’t rot or rust, and it can be melted down and reformed over and over again. You can bury it in the ground and dig it up 1000 years later and it will still look the same.
All these things come together to explain why gold has been valued as a method for storing wealth for ages. It starts out with people digging up and refining gold in the early days of metalworking, and valuing it for its beauty. But it’s rare, so it’s extra valuable because more people want it than can get it. This just puts it on part with a huge amount of rare-but-valuable luxury goods that people have valued down through the ages.
But because gold doesn’t rust away or rot, it’s just really convenient as a store of wealth. If you have some gold you can be sure when you come back to it it’s still all going to be gold, even if you chucked it in a hole in the ground, even if it got wet, even if it got dropped or otherwise mistreated. There’s not a lot of things that work that way.
Try to store your iron coins and you may come back to a lump of rust, that’s not happening with gold.
Another really handy thing about gold is that you can melt and cut and recombine it without losing value. The mass of gold has the same innate value no matter what shape it’s in.
Gemstones in general are in a similar position as gold…they are relatively rare, pretty, and relatively inert. That gives them some of the same value. But gemstones (and diamonds in particular) are subject to more trends in fashion and supply changes (and monopolies) and they are also not as infinitely dividable and recombinable as gold. They are more of just your standard luxury good that people value because it’s rare and pretty. ”’
Now as for why we don’t put value on useful things:
We do put a lot of value on things that are useful…there are a number of metals that are more valuable than gold and have some niche industrial use. But things that are useful tend to not be as good for _stores_ of wealth. For one thing, useful things tend to be too common to make a good store of wealth. You don’t build an industry around a super rare material unless you have no other choice. More importantly though, the value of a useful thing depends on how useful it is, and that’s variable. Maybe someone finds a new way to make a widget without your expensive material, and the value plummets because that was most of the demand. Maybe widgets just get replaced by some new technology. The value of your useful thing could plummet at any moment due to technological change. Gold, on the other hand, has a few thousand years of appeal to people, it’s not likely to lose its demand due to some market shift
The are commodities that allow you to show wealth and status. If the apocolypse comes, I want chickens, shotguns and shells, and fuel. Now I want a nice shiny thing.
I’m no expert but I’m gonna guess it’s for the same reason Money is valuable. Like what good is a piece of green paper other than holding value. It’s not like we really barter in everyday items anymore.
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