Paradox of value

Water is a commodity that is essential to life. In the paradox of value, it is a contradiction that it is cheaper than diamonds, despite diamonds not having such an importance to life.

The paradox of value, also known as the diamond–water paradox, is the paradox that, although water is on the whole more useful in terms of survival than diamonds, diamonds command a higher price in the market. The philosopher Adam Smith is often considered to be the classic presenter of this paradox, although it had already appeared as early as Plato's Euthydemus.[1] Nicolaus Copernicus,[2] John Locke, John Law,[3] and others had previously tried to explain the disparity.

  1. ^ Sandelin, Bo; Trautwein, Hans-Michael; Wundrak, Richard (2014). A Short History of Economic Thought. Milton Park: Routledge. pp. 23–24. ISBN 9781138780194.
  2. ^ Gordon, Scott (1991). "Chapter 7: The Scottish Enlightenment of the eighteenth century". History and Philosophy of Social Science: An Introduction. Routledge. p. 141. ISBN 0-415-09670-7. This 'paradox of value', as it was called, was frequently noted before Adam Smith (for example, by Copernicus who wrote a bit on economic questions)...
  3. ^ Blaug, Mark (1962). "Chapter 2: Adam Smith". Economic Theory in Retrospect. Cambridge University Press. p. 39. ISBN 0-521-57701-2. Moreover, such writers as Locke, Law and Harris had contrasted the value of water with that of diamonds...