This essay is part 2 of a 5 part series. You can find part 1 here
In various forms of business, one will often experience conflicting valuations in some form or another. In finance, it’s quite clear from the outline in an upcoming section of this post that there can be many different valuations for a company. Likewise, within marketing one can have differing valuations for a new product or a market depending on the underlying premises one utilizes when conducting an analysis. A fairly common method to establish the potential market size for a brick-and-mortar business is to determine how many people live in the area where the business will operate, then how many of those are potential customers and how frequently they will need the services offered by the company. In this simple mathematical problem, the definitions of “operating area”, “potential customers” and “frequency of service”, will greatly affect the valuation of the project.
The idea of contextual value is that things outside of an item influence the value placed upon that item by rational actors. The most simple example is how an item for which there is high demand tends to be viewed as more valuable than an item for which there is little if any demand. Some prefer to look at demand as an indicator of value, meaning that high value products will also have a correspondingly high demand, however this is a conflation of a products’ capability for satisfying a need, with the product’s popularity. While one can easily argue that there are correlations between product quality and product popularity, the correlation between the variables are varied.
It is entirely possible to have a low quality product, for which there is high demand, or a high quality product for which there is low demand. Within the dating sphere this often takes the form of “social proof”, which as a variable influences the value of the product either up or down. However, social proof is transitory, as it is composed of variables that communicate and signal high value within a social group. Thus, many of the factors that lead to high social proof, are in and of themselves a part of the product, they are in fact the joint subjective perceptions of the product communicated externally.
Fiat currency (currency not backed by tangible assets) is an example of something which derives almost the entirety of its value from perception, in that it has value because everyone in a group agrees that it has value. It used to be that every note of a currency was the equivalent of a deposit slip for a given amount of precious metal. For instance the British Pound Sterling supposedly got it’s name coins minted from silver in the Saxon isles, and where large payments would be denoted in “pounds of sterling“. If people were to calculate the production value of modern bank notes, the inputs to production would be much less in value than the face value and thus currency is in many ways an abstract idea.
The need for more stable forms of currency arose from the simple fact that barter is not only time consuming, but also from the need to have more permanent stores of wealth. An apple farmer a few hundred or thousands of years ago held his wealth in the form of perishable fruit, that ripened with the season, and as a result he would be very wealthy in apples during the apple harvest. However, at this time supply of apples would be high, thus he would obtain less in exchange for his apples than he would a few months later. On the other hand, not being able to barter all his apples meant that he would be unable to acquire the goods he and his family would need, as the apples would spoil. Thus there was a need for a more permanent store of wealth, which is why currency was invented. The downside of currency being that it gains part of its value from the fact that it is a medium of trade. Even with silver and gold, they were only truly valuable as mediums of trade, it is quite recent that these metals have found value in electronics.
Many people who prepare for the impeding downfall of society, for this reason elect to store wealth in a mixture of precious metals and in various goods they assume people will require after society collapses. This can be foodstuffs with long shelf-lives, medicines, ammunition, and various others. Thus, some items gain their value because they are perceived as having value, rather than some innate, non-negotiable aspect of their being.
How we view value depends on a mixture of the objective and subjective as mentioned earlier in this essay. Certain characteristics of an object are directly of that object independent of our subjective valuation, while other characteristics are less tangible. For instance, an iphone as a product has a certain objective value based on the needs it satisfies and the need of a person to sate that need. However, their preference to satisfy this need through either an Iphone or an Android based product depends on the person’s subjective valuation. Likewise, the value difference between two phones with the exact same objective characteristics, may differ based on subjective perceptions. For instance, those who value “coolness” may prefer an Iphone due to the brand image of Apple. A person may prefer coke to pepsi due to nostalgia or habit.
The box the Iphone comes in does not add significant value to the product itself, but it affects our perceptions of the product. Such effects on value can be either positive or negative, for instance one would tend to value a meal at a sit-down restaurant higher than one from a drive through, regardless of product characteristics because of the context. Likewise, the context in which we view the Iphone will affect our valuations of its objective characteristics, the low battery life compared to other products is important for those who are unable to charge their phones for longer periods of time, likewise the ease with which the screen can be broken or the sensitivity to humidity, may affect the valuation of it compared to alternatives.
Volatility and Sticky Values
Anyone who makes a habit out of following various indexes on stock markets, individual shares, or even consumer goods, will be aware of volatility to some extent. In essence, the volatility of an asset is a measure of how much it tends to fluctuate in price over time. A highly volatile asset, will see higher and more frequent fluctuations than a less volatile asset. The blue chip stocks mentioned earlier in the essay are examples of a less volatile asset when compared to smaller, growth-based companies. I’ve previously compared female sexual market value to that of a growth company, in that it rises and falls very quickly. Whereas male sexual market value is more similar to a blue chip in that it takes a long time to rise, but tends to be more sustainable over time.
The concept of sticky values comes from the observation that the wages of employed workers tends to have a slow response to decline in company performance. As unemployment increases (thus increasing labor supply), while company performances decline (thus decreasing demand for labor), wages do not respond as rapidly as expected to the change. This can often be observed in the sexual market as well, a common observation being that women regard their value just as high, if not higher as they age. Furthermore, that men who had a very high sexual market value early in life, often view their present value as being similar, even though it has declined. In the case of a woman’s declining sexual market value, demand is decreasing, where supply is theoretically increasing, but it takes time for her valuation to respond to the market. In the case of the man, demand has greatly declined, while supply of substitute products have decreased.
Such effects carry into the valuation of self- and others, as it shifts the mean. This effect can be observed in the ever-increasing “average size” of a man or woman since the 1950s. For instance, the average weight of an American man has increased from 166 lbs in 1962 to 191 lbs in 2002, so the average man is presently comparing his own waistline with the waistline of other men of an ever-inflating girth. Thus, the image of a man who is “in shape” will have changed drastically, because of comparative factors. Compared to men who are at 30% body fat, a man who is 20% body fat looks slim, despite the fact that the recommended amount is between 10 and 15% body fat. Likewise women calling themselves “average size” when they are a size 16 is accurate, but it’s leaving out that an average was a size 6 not to long ago.
When people’s success in the sexual market place declines as a result of natural supply and demand factors, it is not uncommon for their self-valuation, and therefore their valuation of others as well to lag behind the market developments. Heartiste observed that a woman in her mid-to-late thirties is often more difficult to sleep with than her 23 year old self, despite the fact that her sexual market value has declined precipitously in a decade.
Tangible and Intangible Asset Values
The distinction between tangible and intangible assets in accounting tends to be that a tangible asset is an asset that has a physical form, whereas intangible assets is synonymous with nonphysical assets. Examples of the former would be land, machinery and inventory, whereas examples of the latter would be among others brand recognition, patents and copyrights. Most companies tend to have a mixture of both to varying degrees, where software companies often have few tangible assets and much of their value is tied up in intangible assets, large manufacturing corporations tend to have many tangible assets and less tangible assets as a percentage of assets relatively speaking.
As with a company, most people are a mixture of tangible and intangible assets, a person’s physique and health would be the primary tangible assets that a person has, while their personality and traits are their intangible assets. A person’s ambition, drive, self-discipline and intellect, would be some examples of these intangible assets. Perhaps the major distinction between the two is that one could potentially design an objective measuring system for tangible assets, to some extent this already exists in the form of medical records. This is perhaps why it’s given a relatively low amount of attention within the sphere and the various articles on “vetting a wife“.
These articles tend to largely focus on the intangible assets of a potential partner, both in isolation, but also in interaction with the intangible assets of others. The essays on this blog pertaining to damaged women are examples of how to identify women who embody certain clusters of intangible assets that will tend to cause substantial amounts of havoc. For instance, when the “vet your potential wife” articles recommend looking at her relationship history, this is a two-part approach, where on one hand, the fewer relationships she has had, the less baggage she will have but on the other the nature of her relationships also allow glimpses into her actions within them.
When these articles advice conducting reconnaissance on the mother, they are advocating a mixture of viewing the inevitable decline of her tangible assets, but also her intangible assets. The mother is a woman’s first and major role-model when it comes to feminine and relationship behaviors, thus the behaviors she learned from her mother are going to be those most firmly imprinted on her mind.