Another Example Of The Difference Between Value And Price: Free Mosquito Nets Are More Valued
from the economics-at-its-finest dept
We've pointed out time and time again how price and value are not the same thing. They may be related, but value tends to explain the demand curve, whereas price is determined by the intersection of supply and demand. To think about it logically, we buy stuff all the time because we value what we buy more than the money we're paying for it (the price). That's why the economic transaction happens. Or, to put it another way, you'll pay the price for something if it's lower than what you value it at, but that doesn't automatically change the value of it to the price. Now, there are some reports that suggest that the price, acting as a signal, can impact perceived value, but that appears to be limited only to a few specific situations.We saw another example of the difference between price and value in a recent episode of Planet Money, which involved a discussion with the authors of the book Poor Economics, about their very data driven look at various economic questions. An early part of the discussion looked at the question of whether or not people in poor countries don't value mosquito nets when they get them for free. Apparently some economists have argued that you have to make poor people pay for their mosquito nets or they won't "value" them. Tragically, it seems that even some economists don't recognize the difference between price and value.
Thankfully, the folks who wrote this book went out and did real research, and the data shows that people in poor countries actually seem to value the free mosquito nets even more than when they have to pay for them. That is, people who received free mosquito nets seemed even more likely to use them than those that were paid for. I'm a sucker for data driven economics, so it's always nice to see stories like this one.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: free, mosquito nets, price, value
Reader Comments
Subscribe: RSS
View by: Time | Thread
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
If something is given to you for free, especially something you need or cannot afford, I would think gratitude comes into play, and one would regard it as a gift. Sentimentality, remembrance, emotion, whatever is received is imbued with those things and adds to its value.
[ link to this | view in chronology ]
You Only Get What You Pay For
[ link to this | view in chronology ]
Re: You Only Get What You Pay For
[ link to this | view in chronology ]
Re: Re: You Only Get What You Pay For
Quite the opposite. All FLOSS projects want your complaints. They call them bug reports and they're used to improve the quality of the software.
Those that tell you, "You only get what you pay for," are trying to sell you their junk at absurdly-marked-up profits. Don't believe them.
[ link to this | view in chronology ]
Re: Re: Re: You Only Get What You Pay For
I'm in total agreement with you, price is no indicator of quality as some would assume.
[ link to this | view in chronology ]
Re: Re: You Only Get What You Pay For
You're not getting quality or quantity, just expensive.
[ link to this | view in chronology ]
Re: Re: Re: You Only Get What You Pay For
[ link to this | view in chronology ]
This Is Why You Can�t Compete With Free
They came for our mosquito nets, but I said nothing.
Then they came for me, but it was too late�I was already covered in mosquito bites.
[ link to this | view in chronology ]
Most of the Windows games I own were bought either used or at a local closeout store for less than $10 each.
On the other hand, sometimes you DO get what you pay for. A while back I bought a container of assorted plastic zip ties at a local Dollar store. Unlike the real thing, they weren't made out of nylon. Where the real ones are practically indestructible, these break easily. In fact, I snapped one the first time I tried to pull it tight around a small bundle of cords.
[ link to this | view in chronology ]
In America "kids" have a sense of entitlement and have to have "the jeans" that make them cool. A homeless person cares not what the label says, but is grateful for jeans to wear. We are bombarded with messages of you need this and it has to be expensive, so we look down on anything with a low cost, and then we assume everyone everywhere is just like us in this manner.
There was a story on Boingboing about a new Meningitis vaccine that was only $0.50 a dose and works better than the $120 a dose version being sold by others.
http://www.boingboing.net/2011/06/14/in-africa-a-50-cent.html
Do you think the people are they are getting a 50 cent version of the item, that works better, or the 120 dollar version? I think the concern would and should actually be I'd want the 50 cent version because its better.
[ link to this | view in chronology ]
Re:
Look at it's price compared to the 50 cent! Pfft, that's a no brainer.
Now, if you'll excuse me, I'll go back to my brainwashed consumer activities.
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re:
I truly feel sorry for the homeless in America. No one should be homeless in such a country. The fact that they are speaks very poorly for the others.
[ link to this | view in chronology ]
The mistake you are making is confusing the value for mosquito nets as a whole, as opposed to mosquito nets as an individual item. You cannot take the value of something as a whole and expect that value also to apply to the way individual people treat individual items.
I value disposible lighters more than a pack of matches. Both achieve the same result (lights my smoke), but one of them I pay for and one of them is a gimmie. I know exactly how much I value paper matches (very low), unless I don't have matches or a lighter, than I value them highly.
Value means many things at many levels, you cannot apply one value to another circumstance!
[ link to this | view in chronology ]
Copyright maximalists
And upon hearing that, the copyright maximalists brought out their hard data. With actual supporting facts. And non drastically skewed survey results. And honest reasoning. And they stopped conflating terms that had no relation. And they stopped crying about child porn and terrorism. And ... oh wait ..
[ link to this | view in chronology ]
Re: Copyright maximalists
[ link to this | view in chronology ]
I am trying to listen to that podcast
The other meaning of "valuing something" is the willingness to protect and preserve it and put it to its best use once you have it. If you can get as many free mosquito nets as you want for free, there is really no need to protect and preserve the net because you can get one whenever you want.
Now, the budget constraint of a poor person may prevent them from being able to pay the price, but that does not negate the fact that they might get a great benefit from such nets. If, in addition, you cannot get as many free nets as you want as often as you want, then you will "value" the free bed net in the sense that you will want to protect and preserve it and put it to its best use.
I do not find the experimental evidence convincing that there is anything other than budget constraints and a resulting downward sloping demand curve operating here.
The fact that this is undermining any local enterprising entrepreneur from trying to produce/procure bed nets and sell them is important. In the long run, it is much more important for poor countries that there are people who are willing to set up production (and employ people) which will not happen so long as anything and everything of value to the local population drops from the sky in an aid basket.
[ link to this | view in chronology ]
Re: I am trying to listen to that podcast
Malaria, Politics and DDT
[ link to this | view in chronology ]
Don't use your China everyday
Paying for it extra can lead to treating it carefully, ie, not using it.
Also:
Software doesn't break (or at least many believe it can be "renewed" through a re-installation).
High price can have the effect of making something difficult to replace.
High price can also leverage the consumer's awareness of his/her imperfect knowledge over value to suggest that a more knowledgeable third party (or society itself) understands this should be priced higher. Some promotion and some types of marketing and brand building leverage this.
Like culture, when a large group uses something, this also adds value (reinforced perhaps by the idea that society knows better).
Experience (eg, proof of utility) leads to better price knowledge. This is one reason why so many new things get introduced. The mere fact it's new comes with value, and, in addition, what is new is more likely to be able to be priced higher.
[ link to this | view in chronology ]
Of Course
It reminds me of a story told to me by an elderly man I knew in my youth. He job took him all over the world. One trip was to Russia in the winter. It was snowing and periodically his cab driver would stop and get out to clean the windows. He finally queried the cab as to why he would stop and get out rather than use the windshield wipers. He cab driver's reply was the replacement wipers cost so much that he didn't want to use them unless he had somebody important in his cab.
[ link to this | view in chronology ]