Economic Value

  

Economic value is the value of a good or service, taking into account the opportunity costs of that good or service.

Opportunity costs are trade-offs: essentially, all the options you’re giving up by choosing the option you did. When people want to “keep their options open,” it means they’re afraid of committing to one option, because that closes the door to all the others.

Economic value takes into account market value (how much something costs), but it goes beyond that. Market value says to you, “That chocolate bar costs $3” while economic value says “That chocolate bar costs $3, plus more fat on your bod, plus a shot of serotonin and endorphins, plus three fewer dollars you could be spending on something else...like saving up for some headphones, or buying even better chocolate.”

No wonder economics is the dismal science...it makes you start regretting your choice even before you made it. But looking at all your options before you commit is rational, right?

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Finance: What is a Hard Asset?12 Views

00:00

Finance allah shmoop What is Ah hard asset Yeah It

00:07

takes a lot of hard work to get an asset

00:08

like that Okay So hard asset is just one that

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you can bang on touch Engage with cell Alright examples

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Oil it's Hard asset gold Hard of vintage nineteen Fifty

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seven Ferrari with beige leather interior hard four thousand head

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of longhorn cattle in texas A commercial building in the

00:28

best part of town All of these arm or less

00:31

commodities Hard assets Well okay Okay The categories Rare cars

00:35

art coins stamps stuff like that that's where they fit

00:38

So what do you care if something is ah hard

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asset or a soft one Well most or all hard

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assets are commodities and they generally do very well in

00:47

periods of very high inflation when you know stocks were

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getting crushed And yeah the feds raising rates appoint a

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quarter now forever Well equities and bonds will get crushed

00:58

Commodities well generally keep up with the spike in prices

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causing the fed raised rates in the first place So

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they're a good hedge for most investment portfolios And not

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all of them are great forever like check out riel

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Inflation adjusted oil prices the last few decades you had

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not a good run Most not all do well though

01:17

an oil will likely have its day in the sun

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again At some point you lan When in doubt remember

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what kim kardashian and warren buffett said A good asset

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is hard to find and a hard asset is good

01:30

to find But we won't tell you who said which

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Finance: What is Opportunity Cost?
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What is opportunity cost? In short, it's the eventual monetary cost of choosing to do one thing over another (often choosing travel or experiences...

Find other enlightening terms in Shmoop Finance Genius Bar(f)