As any of you who know me are well aware, I am an incurable baseball fan (particularly “old” baseball). I find it to be a metaphor for life. My kids often play a game where they name any topic, and my challenge is to relate it to baseball. My oldest child is 21, and I remain undefeated. My poor family has had to endure multiple trips to baseball’s museums and shrines, listening to me wax eloquently (in my opinion, at least) about everything from the heyday of the Negro Leagues to the origins of the sport in the mid-1800s.
Two events happened recently which caused me to turn my baseball lens toward economics (not the first time that has happened). When Gary Carter was inducted into the Baseball Hall of Fame, I noticed the price of his autograph went up by $15. (By the way, I subjected the family to a sweltering “Induction Sunday” in Cooperstown two years ago; I highly recommend it.) A few days later, ESPN did a story on the “10 Most Underrated Athletes,” and my personal hero, Stan Musial, topped the list. It has always bothered me that Stan’s autograph (I have a collection of them spanning 40 years) sells for less than those of his contemporaries and later players of far less ability, character, and class.
All of that to say that people are frequently confused about the “value” of things, and these misconceptions often cost them quite a bit of money. Thinkers have grappled with the concept of value for a long time. As early as the thirteenth century, some of the Scholastic writers tried to grapple with it. (Aristotle even offered one or two thoughts much earlier.) A few years later, their most prominent member, St. Thomas Aquinas, tried to define a “just price” to be paid for any good. He basically concluded that the value of a thing was equal to what it cost to make it. (His purpose, by the way, was a noble one indeed. He was instructing the monks and priests of the day on the proper restitution people must pay if they destroyed another’s property in order to avoid eternal damnation.) While this concept is remarkably close to what economists today call a long-term equilibrium price, it really tells us very little about value.
In the 1800s, many prominent minds (including David Ricardo and Karl Marx) concluded that the proper standard was a “Labor Theory of Value” in which the cost of worker input was the deciding (or at least most significant) factor. This approach is useful and helps to play a role in resource allocation, but it does not get to the essence of value.
When all is said and done, the value of any good or service (from an economic perspective) is merely what it can be sold for at any given moment in the market—nothing more and nothing less. Whether it is stocks, bonds, real estate, coins, Arabic horses, or baseball autographs, the answer is the same. A lot of things go into determining that number (some rational and some not), but that is the number. Gary Carter’s bump up in autograph value was because his induction into the Hall of Fame means people are willing to pay more. Whether it is sustained or not remains to be seen (although I wouldn’t bet on it). Stan Musial’s autograph value is relatively low because, for whatever reason, his achievements haven’t captured the imagination of consumers in the same manner as some less skilled, but more flamboyant players.
Never lose sight of this basic diction—the value of something is what you can get for it. After all, baseball is life.