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HICKS: What silly bands say about the value of things

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Mike Hicks

In the Hicks household, this will long be remembered as the “summer of silly bands.” If you have not heard of these wondrous items, you must count yourself as culturally uninformed and wholly ignorant of the prime conversation starter at swimming pools, soccer camps and other summertime venues.

Because at least one gentle reader is likely unacquainted with silly bands, I shall fulfill a duty of explaining these rubber marvels and their economic significance.

Silly bands are thin rubber bracelets that come in delightful shapes, including hearts, donkeys, cars, violins and tanks (the latter is a personal favorite). 

These items sell at convenience stores—oftentimes very quickly according to the folks at the cash registers. It is important to note that children trade silly bands. The goal, according to those urchins I have queried, is to have an extreme variety in colors and shapes. The rarity of silly bands is important, and, as I understand it, a glow-in-the-dark kelly-green monkey vies with the gray U-boat or orange flamingo for scarcity, and therefore value.

There are economic lessons here. The most important is that the value of things is necessarily determined by what is known in econo-jargon as utility. The notion of utility tells us that it is the desire for and scarcity of an item that generate its value in a market exchange. Now, this is very deep philosophical stuff, since it clearly implies that in our worldly realm, it is humans alone that set the value of things.

Thus, there are no truly intrinsic values to nature, life and the like. This idea of value is also a deeply egalitarian, intellectually rigorous and honest approach to the world. This notion is easily misunderstood, for the absence of an intrinsic value for something does not mean it is less valuable—only that it is human preferences, not dogma, that make that judgment.

It manifests itself elegantly. Here’s an example: 

Suppose we thought that our natural surroundings had an intrinsic value. Then, any one acre of land would be just as valuable as another. Yet, the 843 acres of Central Park in New York are hugely valuable, even though they are not for sale. That’s not because it sits near other high-priced real estate, but because green space is scarce in New York and well-liked by New Yorkers.

This value metric is also consistent with the deepest beliefs. For example, human life has value, but in our eyes is not equally valuable. We all know this and act routinely this way. By way of illustration, by my reckoning, wearers of silly bands are more valuable than business columnists. 

Economists exploit these truths to estimate the relative value of cleaning air or water, or building more green spaces. This is a critical notion for informing public policy about investments in the environment and other things that cannot be as easily traded, or valued, as silly bands.•

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Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.

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  1. With Pence running the ship good luck with a new government building on the site. He does everything on the cheap except unnecessary roads line a new beltway( like we need that). Things like state of the art office buildings and light rail will never be seen as an asset to these types. They don't get that these are the things that help a city prosper.

  2. Does the $100,000,000,000 include salaries for members of Congress?

  3. "But that doesn't change how the piece plays to most of the people who will see it." If it stands out so little during the day as you seem to suggest maybe most of the people who actually see it will be those present when it is dark enough to experience its full effects.

  4. That's the mentality of most retail marketers. In this case Leo was asked to build the brand. HHG then had a bad sales quarter and rather than stay the course, now want to go back to the schlock that Zimmerman provides (at a considerable cut in price.) And while HHG salesmen are, by far, the pushiest salesmen I have ever experienced, I believe they are NOT paid on commission. But that doesn't mean they aren't trained to be aggressive.

  5. The reason HHG's sales team hits you from the moment you walk through the door is the same reason car salesmen do the same thing: Commission. HHG's folks are paid by commission they and need to hit sales targets or get cut, while BB does not. The sales figures are aggressive, so turnover rate is high. Electronics are the largest commission earners along with non-needed warranties, service plans etc, known in the industry as 'cheese'. The wholesale base price is listed on the cryptic price tag in the string of numbers near the bar code. Know how to decipher it and you get things at cost, with little to no commission to the sales persons. Whether or not this is fair, is more of a moral question than a financial one.

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