Value (economics)

Not to be confused with Market value.
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In economics, economic value is a measure of the benefit provided by a good or service to an economic agent, and value for money represents an assessment of whether financial or other resources are being used effectively in order to secure such benefit. Economic value is generally measured through units of currency, and the interpretation is therefore "what is the maximum amount of money a person is willing and able to pay for a good or service?” Value for money is often expressed in comparative terms, such as "better", or "best value for money",[1] but may also be expressed in absolute terms, such as where a deal does, or does not, offer value for money.[2]

Among the competing schools of economic theory there are differing theories of value.

Economic value is not the same as market price, nor is economic value the same thing as market value. If a consumer is willing to buy a good, it implies that the customer places a higher value on the good than the market price. The difference between the value to the consumer and the market price is called "consumer surplus".[3] It is easy to see situations where the actual value is considerably larger than the market price: purchase of drinking water is one example.

  1. ^ Department of Finance (Northern Ireland), Definition of best value for money, endorsed by the Northern Ireland Executive on 22 March 2011, accessed 8 December 2023
  2. ^ BBC News, Ferry to be built at Ferguson yard despite not being 'value for money', published 16 May 2023, accessed 8 December 2023
  3. ^ "Consumer Surplus" (PDF). p. 7-1, 7-2.