The Four Forms of Value
What makes something valuable? Why are diamonds more valuable than the rocks in my yard? There are 4 things that affect the value of something. They are: usable value, rare value, aesthetic value, and emotional value.
Usable value pertains to the practicality of something. Essentially does this fill a physical need? A can opener is a good example of this. It has a very functional purpose. An object’s usable value is usually created by the engineers who designed and built it, and they improve it’s usable value by making it work better or more efficiently.
Aesthetic value comes from its intrinsic beauty. This is what art is all about, but this form of value can include things we don’t normally think about as art. Basically anything can be made in an aesthetically pleasing way from cups to chairs to cars. To increase something’s aesthetic value you need to improve its visual appearance. This is usually done by artists and designers.
Rare value is simply a function of supply and demand. If something is rare then we perceive it as being more valuable whether or not it’s actually rare. Gemstones are a great example of this. To increase something’s rare value you need to decrease access to it. This is usually handled by investors and economists who are managing the supply and demand of something.
Emotional value comes from our emotional attachment to things. For example, you’ll value the stuffed animal from your childhood much more than anyone else because you’re more emotionally attached to it. This includes more than just sentimental items though. For example, you can be emotionally attached to a brand or product and be willing to pay more for it than for a different but equivalent product. In order to increase the emotional value of something you have to change how people think about it. You have to change their perspective. Usually this is done through effective marketing and brand building. As you might imagine that’s usually done by marketers and brand managers.
Everything includes some level of each of these forms of value. If you want to increase the value of an item you can make changes to any one of these areas.
Things that only have value in one of these four areas are nice, but tend to not be very valuable and are easily forgotten. For example, sunsets are beautiful and they’re almost universally found to be beautiful. Yet they’re so common that they almost seem to have little to no value. They become cliche to use. It has a high aesthetic value but it’s not very rare, most of us don’t have an emotional attachment to it, and it doesn’t provide any functional service. So it’s nice to look at from time to time. We can even appreciate it in the moment, but sunsets are quickly forgotten.
Let’s compare that to diamonds. While diamonds do have functional value in tools I’m going to talk about their value as jewelry. Diamonds for jewelry manage to hit 3 of the 4 forms of value. They don’t have a lot of functional value. They could easily be replaced with another stone and the jewelry would still work fine. Diamonds do look good. They’re also rare. Those 2 forms of value are good, but where diamonds shine the most is in their emotional value. The diamond companies have managed to attach them emotionally to weddings and your status and worth as a person. Not just that, but also as something that can be a generational item passed down from parents to children.
Diamonds have three of the four forms of value. And consequently their prices are quite high.
High-end art also hits three of the four forms of value. It’s usually quite rare, it has a lot of emotional value as a status of wealth and power, and they’re also often beautiful.
So if you want to increase the value of something improve it in one of these four areas and you should see a return.
I hope you’ve found this information to be useful. Thanks for reading.
