This section is from the "Economics In Two Volumes: Volume I. Economic Principles" book, by Frank A. Fetter. Also available from Amazon: Economic
§ 8. Value. Now as a choice is made and a valuation is thus expressed, the person choosing feels that there is a certain quality in the thing which evokes or determines his choice. This quality of importance which things have when they are the objects of man's choice is value. Broadly understood value may be of many kinds: moral (the quality in actions calling for approval or disapproval), religious (the quality in actions, sentiments, and beliefs reflecting what the persons believe to be the will of the deity), esthetic (the quality in objects that accords with the canons of good taste in color, form, sound, etc.). Economic value is but one species of the larger genus of value. It is the quality in an object in the environment to influence a man's action in respect to the control and use of the object. We ascribe this quality to the object that motivates our choice. Bread, meat, dress, houses, land, gold, carriages, slaves, the labor of hired servants, each object is said by you to have (economic) value, just because you feel and know that it sways your behavior in relation to itself. Value in this sense is not inherent or intrinsic in anything; it goes and comes, it grows and wanes, according to the intensity of the desire. It may have existence for one economic subject and not for another. It is not to be thought of as something in a thing before man makes it an object of choice. The logical order is: first, choice; secondly, a valuation by necessary implication; third, value - the quality imputed to the object. Yet in real life these are but three phases, absolutely contemporaneous, of the same thing. Value is but the abstract quality which we attach to the thing in our thought, because of the way it makes us behave in its presence. Value is fundamentally a reflection of the individual choice, though many individuals may have a similar choice, and by their interrelations mutually influence each other's valuations in remarkable ways. Objects have their physical qualities independent of man's choice; the apple has form, weight, the texture and skin which to the eye look red, and the chemical elements that give a certain flavor and taste. These singly or combined are not value, tho each has its part in determining under varying conditions, whether the apple is to have also the quality of value. There are as many problems of economic value as there are ways of choosing between economic objects. Their study makes up a large part of economics.*
3 It is, however, but the anticipation and reflection of the choices that purchasers will later make. See on enterprise in Part V.
Aspects of things chosen. Choice itself has a number of aspects and is made in reference to one or another quality of goods and acts (when certain other qualities are for the time equal or may be left out of consideration). The four chief aspects of choice relate to stuff, form, place, and time, as follows: (1) Choice of kinds of things (the simplest case being choice among things present and chosen for their immediate use and enjoyment), as choice between different kinds of objects, such as food and clothing, apples and oranges; or again the things may be of the same general kind but of different qualities, as apples differing in sweetness, smoothness, and in color; or the objects may be of different sizes or be in different quantities. (2) Choice of form, as an apple cut and pared rather than one uncut, or cooked food rather than uncooked food, or a made garment rather than the unmade cloth and materials. (3) Choice of the place, as an apple here rather than on the tree or on a distant farm, a pail of water in the house rather than at the well, home for one's self rather than the roadside at dusk with home still miles away, etc. (4) Choice of the time at which goods of a certain kind shall come into one's control, or that acts should be done, as choice of food at once when hungry rather than later, or of rainfall after a drought rather than during a flood, or the choice involved in keeping of food for winter instead of eating it all in the fall, etc.
These choices occur in many combinations and degrees of difficulty and complexity. It is a large part of the task of economics to study in detail the large groups of choices which are thus made.
Various meanings of scarcity. In economics the idea of scarcity is (as is shown above) connected with limitation relative to the desire for the objects. But "scarce" has other meanings. Sometimes it is that of rare, or uncommon (which usually, tho not always, implies desirability), as a scarce plant, a scarce butterfly, or a scarce stamp. Scarcity means also a small amount compared with the average or usual; it is said that wheat is scarce the year of a poor harvest tho there are millions of bushels of it, and conversely that "wheat is not scarce," when there is a good harvest; yet in relation to choice it is merely less scarce than usual.
4 See note below on Value and valuation.
Value and valuation. The words value and valuation are frequently used interchangeably without much harm; yet for great precision it would usually be better to distinguish between them. The essential meaning of value as given in §8 (a quality imputed to an object by a man) is individual, that is, it relates to a particular person. The meaning is somewhat different when value and market value are used for convenience to express a valuation, that is, some one's estimate (as a statistician's, an official's) of the amount of goods in terms of price, such as the value of the imports and of the exports, the total value of the wheat crop of the country, the value of all the outstanding stock of a corporation. This valuation is obtained by multiplying the whole number of units of goods, shares of stock, etc., by the price in a single transaction. This valuation is not to be confused with price; price is an actual amount of money paid, whereas the valuation is an estimate of the total number of dollars for which all the articles could have sold, if they had changed hands at that price. In fact, in many cases, many of them did not change hands at that time.