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Social process of valuation - Coggle Diagram
Social process of valuation
INTRODUCTION
EVALUATION -
refers to the process by which individuals and societies assign value to goods, services,
and cultural artefacts,
often influenced by subjective perceptions and social norms
Cultural constitution of economic life
ECONOMIC ACTIVITES - are
embedded within cultural frameworks that shape perceptions, behaviours, and the valuation of goods and services
CULTURAL FACTORS - such as
beliefs, traditions, and societal norms significantly influence consumer preferences, market trends, and the creation of (economic) value
VALUE -
in market
settings is
not solely determined by monetary worth but encompasses a complex interplay of factors such as shared definitions utility, scarcity, and cultural significance
ECONOMIC VALUE IN GIFT ECONOMIES
GIFT ECONOMIES - involve
exchanges without explicit agreements for rewards
MALINOWISKI'S STUDY - The
exchange of gifts is a symbol of social interaction (solidarity), not regulated by market exchanges,
and
embodies the concept of reciprocity
Complexity: Gift exchange involves intricate social and symbolic dynamics
Economic value can exist independently from market exchange intentions, reflecting the multifaceted nature of valuation processes
ECONOMIC VALUE THEORIES - over time
ECONOMIC VALUE - is an
abstract content with visible outcomes
NEOCLASSICAL € THEORY
Adam Smith -> labour determines value
MARX
argued capitalism exploits labor, extracting surplus value realised in the market
Neoclassical Economists:
value is entirely subjective, dependent on what people are willing to pay
Limitation according to sociology: this t
heory fails to fully explain preference formation. Sociology emphasises social and cultural factors influencing value.
-> proof ->
€ behaviour is often irrational and counter-utilitarian
-> example:
conspicuous consumption, expensive goods are bought for social display
MARKETS IN ECONOMIC SOCIOLOGY
Exchange in markets is
ideally voluntary and peaceful, underpinned by respect for property rights
Markets represent one form of economic coordination, characterised by the presence of competition, alongside others
, e.g., hierarchies and networks
Conditions for competition
Actors must desire the good and must be able to assess their qualities relative to each other and compare them in terms of their value
STANDARD MARKET -
offers are evaluated independently from the buyers and sellers
-> gold
STATUS MARKET -
Offers are evaluated with reference to the actors who offer/purchase the product. Value is a function of participating actors
-> fashion industry - the
price gap you pay
for a Gucci shirt vs. a Sergio Tacchini one
depends more on the value of the brand itself and who buys that product than the intrinsic quality of the t-shirt
Uncertainty in markets - stems from:
contingency of the value of products, difficulties in judging the qualities of the products offered in the market
- if these issues can be resolved, the production and distribution of economic goods be coordinated through markets
Consumer either identify or diverge from products → supply and demand as a mechanism to discern value
PRODUCER - identification v differentiation
CONSUMER -
classification work is not enough -> value judgment is necessary
Classification and categorisation of goods
Market actors evaluate goods based on classification and categorisation, distinguishing their value relative to other goods
CATEGORISATION is
based on immediate context
; CLASSIFICATION is binding and is
based on pre-established requirements
-> CATEGORIES are
social queues that guide our behaviour
Categories are
sometimes a short cut
, they
mediate between our time and what we want
Issue of choosing from a variety of products -> solution is based on judgement of good's quality
-> QUALIFICATION
QUALIFICATION -
refers to the development of shared cognitive and normative understandings of the qualities of the products exchanged
- not context-sensitive
RANKINGS
are a social construction
- it forcers universities to compete as if they were acting in a market competing for who offers the highest level of education -
are performative
Value conflict
Clashes and conflicts in the evaluation
of an action, a person, an organisation, or an object
can also have their source in the use of the different scales applied for judging them
-> must analyse how different values coexist
BANKSY -
self-destruction auction which prevents an aesthetic value from becoming and economic value
-> message: not every piece of art can be converted into monetary value
There is
no exchange-rate between values
-> “translations” between values might seem a mistake, but do occur often by means of socially constructed criteria
Economic values and morals
Involve economic and non-economic dimensions
Economic value goes hand in hand with morality
ZELIZER 1979 -
showed how the emergence of the insurance industry was initially blocked by religious beliefs that held life insurance to be morally offensive because the beneficiary would profit from the death of a loved one
- insurance companies calculated a monetary value of people
Moral values can block markets
They
can however also contribute to the value of products
Example:
eco-friendly produced
, morality can increase the value of a good
Hidden morality
VELTHUIS’ experiment: he interviewed multiple gallerists asking them how they value art. Gallerists talked about money as storytelling. Further, when discussing about money, buyers were brought in another room, one in which there was no artwork
GOFFMAN - back and front stage
THE CONTROVERSIAL EVALUATION OF NATURE IN THE WAKE OF A DISASTER
Case study: team of firefighters cleaning the Alaskan coast following the EXXON VALDEZ OIL SPILL
Issue of compensation
Alaskans demanded massive compensation for the damage to their pristine lands and livelihoods
Represented an unprecedented challenge:
how to assign a dollar value to the immeasurable environmental and social costs?
Contingent valuation
Method assigned
Passive use values
of $2.8 billion -
passive use valuation aims to assess the value people place on resources they are unlikely to use directly.
Passive use valuation was critical in justifying higher compensation for environmental damages
This method allows for a broader understanding of the value of natural resources beyond just their immediate utility.
The
significance of passive use valuation lies in its ability to capture the broader societal and ecological value of natural resources, which may not be adequately accounted for by other measures focusing solely on direct usage or observable behaviour
. By considering individuals' value on the existence and preservation of these resources, passive use valuation provides a more comprehensive perspective on the importance of environmental conservation and the “true cost” of ecological damages.
Lessons from the case study
Economics isn't just about numbers, it's also about power and influence
Monetary values may overlook other important aspects