Marginal Value

A reader recently asked me what price she should be willing to pay for cheap beer by the case. When buying beer at the liquor store (or “beer distributor” if I happen to be in Pennsylvania) I expect “sub-premium” beers (such as Hamm’sPBR, Miller High Life, Keystone, etc.) to be about $15.00 per 30 before tax. When buying slightly better beers, I regard it as a good deal if I can get beers at under $1.00 each. And, of course, one must be willing to pay more for better beers.

But it bears repeating that value is not intrinsic. So I repeat, in the words of Ludwig von Mises: “Value is not intrinsic, it is not in things. It is within us; it is the way in which man reacts to the conditions of his environment.” We may attempt to assign value to something, but those values mean nothing without human action. Either we buy at a given price or we do not. If we say “Pabst is not worth $25.00 per 30” but then still make that purchase, we are clearly mistaken. It is only the act of the sale that tells us anything concrete about value.

What’s more, values change relative to each other based on each individual’s hierarchy of wants. “If a man is faced with the alternative of giving up either one unit of his supply of a or one unit of his supply of b, he does not compare the total value of his total stock of a with the total value of his stock of b. He compares the marginal values both of a and of b. Although he may value the total supply of a higher than the total supply of b, the marginal value of b may be higher than the marginal value of a.” This helps shed light on the classic question of why gold is more prized than water, even though water is essential for human survival while gold is not. The answer lies in the fact that under most circumstances, the marginal value of a unit of water is less than the marginal value of a unit of gold. This is because water is generally plentiful enough to supply our basic needs. But it is equally true that in the severest drought, one would not part with a unit of water for any amount of gold; the marginal value of each has changed with the circumstances.

Beer of the week: Casablanca Premium Lager – Among the many conditions that factor into valuing beer is location. In Morocco one may expect to pay slightly more for a beer than one might expect given the prevailing exchange rates. The marginal value of the stock of beer is somewhat higher for its relative scarcity. (That is not to say that it is hard to get beer in Morocco; it is just a smaller market.) Casablanca, Morocco is one of the largest economic centers of Africa. It is also the source of this aptly named beer. Casablanca lager is clear and pale, with a very faint and dry aroma. It is a very standard micro, but plenty refreshing.

Reading of the week: Human Action by Ludwig von Mises – Later in this, his chef d’oeuvre, Mises writes: “The moralists’ and sermonizers’ critique of profits misses the point. It is not the fault of the entrepreneurs that the consumers–the people, the common man–prefer liquor to Bibles and detective stories to serious books, and that governments prefer guns to butter. The entrepreneur does not make greater profits in selling “bad” things than in selling “good” things. His profits are the greater the better he succeeds in providing the consumers with those things they ask for most intensely.”

Question for the week: Do the common people truly prefer liquor to Bibles and detective stories to serious books? Is it not simply true that the marginal value of a second Bible is quite low compared to the marginal value of a second drink?



My daily commute has recently increased from 5 minutes to 50 minutes. As a result, I have added a new category of reading to my routine: train reading.

The law library has some “popular reading”, but I have no interest in the works of John Grisham and the selection consists of little else. I was pleased to find, however, that there is also a complete set of the Harvard Classics. I picked up Volume 39, Prefaces and Prologues. The table of contents included a list of authors who all either are or ought to be among those I have written about on this blog: Calvin, Copernicus, Bacon, Newton, Goethe, and more. But it was after reading the introductory note by William Allan Neilson that I was totally set on making this volume my commute reading.

According to Neilson, a preface is where “the author descends from his platform, and speaks with his reader as man to man.” Whatever the character of his narrative voice in the final work, the preface is his own; “a personality which has been veiled by a formal method throughout many chapters, is suddenly seen face to face in the Preface.” In short, the preface is the closest thing to getting to chat with the author about his work, and that conversational aspect appeals to me greatly.

The very first reading on this blog was a preface: Wilde’s preface to The Picture of Dorian Gray. Since then, I have used prefaces from Bede, Kant, Descartes, Machiavelli, Huygens, and Rabelais. If the preface really is the way to interact with authors “man to man” as Neilson put it, I could hardly think of a group of men I would rather get to know.

So I attempted to check out Volume 39 and was informed that the library does not allow books that are part of a set to circulate. I suppose that the idea is that if I were to steal the book or lose it, it would ruin the set. There are plenty of copies of the Harvard Classics out there, but replacing a given volume from a specific printing might prove difficult or even impossible. Still, I would be willing to wager that I am the only patron who has picked up that particular book since it was placed on the shelf. I may even be the only person to have opened it since a rubber stamp was used to mark it as library property. Under these circumstances, it seems pretty stupid to keep the books from being checked-out by the one person with any interest in them.

Since unthinking bureaucracy crushed my reading plans, I checked out a book of Kafka short stories instead. It seemed only appropriate.


Beer of the Week: Hamm’s Premium – The can still says that Hamm’s is “from the land of sky blue waters,” but it is no longer brewed in Minnesota, but in Milwaukee by MillerCoors. (See also National Bohemian beer, from “the land of pleasant living” and also brewed under contract far from the original brewery.) Even after taxes, I paid less than 50¢ per can for this beer, so expectations were low. So low, in fact, that I was pleasantly surprised. Don’t get me wrong, it is not good; it is about as bland as mass produced beers get. It is, however, not bad. I could drink a lot of this stuff on a hot day and not complain.

Reading for the Week: Harvard Classics Vol. 39 by William Allan Neilson – When Charles W. Eliot, the president of Harvard, suggested that a liberal education could be obtained by reading 15 minutes daily from five feet of shelf space, publishers asked him to prove it. And so, the Harvard Classics “Five Foot Shelf” was born. Eliot selected the works to be included and enlisted William Neilson to choose the editions and write the introductions.

Question for the Week: What work would you most like to discuss with its author?