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<p>[QUOTE="Tejas, post: 8281640, member: 84905"]That is a very interesting set of thoughts.</p><p><br /></p><p>Economists have battled with the concept of "value" for most of the 19th century. Classical economists, including <b>David Ricardo</b> and <b>Karl Marx</b> believed that the value of a good is determined by the costs incured in making the good (labor theory of value).</p><p><br /></p><p>It was only in the mid-19th century when Prussian economist and statistician <b>Heinrich Gossen</b> first discovered the concept of "marginal utility". That means Gossen realized that a good's value was not determined by anything that went into its production, but by the utility derived from the last marginal addition of this good.</p><p><br /></p><p>Gossen's findings were elaborated on by <b>Carl Menger</b> in Austria and <b>William Stanley Jevons</b> in the UK and <b>Leon Walras</b> in Switzerland. The upshot of marginal value/utility theory is that: 1. value is subjective (depends on subjective preferences) and 2. scarcity determines value. The precondition is that the good is an economic good, i.e. it is scarce and useful. (Nuclear waste is scarce, but not useful. Air is useful, but not scarce and hence both are not economic goods).</p><p> </p><p>What does that mean for ancient coins?</p><p>1. <u>Ancient coins are economic goods</u>, because they are scarce and useful (for academic research, as collecting items etc.) This may not be the case for completely eroded coins, they may have seized to be economic goods.</p><p><br /></p><p>2. <u>The valuation of coins is subjective;</u> an objective valuation is impossible. Subjective valuation depends on the preferences of the buyers. Value is not the same as monetary price. A collector buys a coin if his subjective valuation (in terms of utility that he expects to derive from the coin) exceeds his valuation of the monetary price.</p><p>This is a big difference between collectors and investors. The former derive value from a coin while they have it in possession. The latter derive value only after they have sold it again.</p><p><br /></p><p>3. <u>The valuation of every coin depends on scarcity</u> (of type, condition, historical significance, etc. )<u> and buyers' preference.</u>[/QUOTE]</p><p><br /></p>
[QUOTE="Tejas, post: 8281640, member: 84905"]That is a very interesting set of thoughts. Economists have battled with the concept of "value" for most of the 19th century. Classical economists, including [B]David Ricardo[/B] and [B]Karl Marx[/B] believed that the value of a good is determined by the costs incured in making the good (labor theory of value). It was only in the mid-19th century when Prussian economist and statistician [B]Heinrich Gossen[/B] first discovered the concept of "marginal utility". That means Gossen realized that a good's value was not determined by anything that went into its production, but by the utility derived from the last marginal addition of this good. Gossen's findings were elaborated on by [B]Carl Menger[/B] in Austria and [B]William Stanley Jevons[/B] in the UK and [B]Leon Walras[/B] in Switzerland. The upshot of marginal value/utility theory is that: 1. value is subjective (depends on subjective preferences) and 2. scarcity determines value. The precondition is that the good is an economic good, i.e. it is scarce and useful. (Nuclear waste is scarce, but not useful. Air is useful, but not scarce and hence both are not economic goods). What does that mean for ancient coins? 1. [U]Ancient coins are economic goods[/U], because they are scarce and useful (for academic research, as collecting items etc.) This may not be the case for completely eroded coins, they may have seized to be economic goods. 2. [U]The valuation of coins is subjective;[/U] an objective valuation is impossible. Subjective valuation depends on the preferences of the buyers. Value is not the same as monetary price. A collector buys a coin if his subjective valuation (in terms of utility that he expects to derive from the coin) exceeds his valuation of the monetary price. This is a big difference between collectors and investors. The former derive value from a coin while they have it in possession. The latter derive value only after they have sold it again. 3. [U]The valuation of every coin depends on scarcity[/U] (of type, condition, historical significance, etc. )[U] and buyers' preference.[/U][/QUOTE]
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