Resources are finite. The value of a resource is determined by its utility and affluence. It’s something like:
Put it all together...
(New & Old likelihood being the likelihood of achieving XYZ goal)
We subconsciously make this calculation when we assess the value of a resource. Each resource has a different value based on the individual and the assessment of their condition, but in general we have pretty similar hierarchies of value.
Here’s a thought experiment:
- You’re stranded in the desert. You’ve been starving for the last week and a half and are down to your last 100ml of water. A witch comes out of a cave and gives you the choice between a fist full of gold and 1L of water. Which one do you choose?
- You’re at home, sitting on your couch. A genie comes out of a bottle and gives you the choice between a fist full of gold and a lifetime supply of water. Which do you choose?
Under these assumptions (bellow), we can calculate the value of gold vs water in each scenario:
[likelihood increase scale = 0–1]
[time scale = 0–1]
[resources spent scale = 0–∞]
[quantity available scale = 0–∞]
(affluence is 0–∞ for reasons outlined later. Time is restricted, 1 being all your time, 0 being none. Likelihood is restricted, 1 being 100% 0 being 0%. Resources spent aren't restricted).
In the first scenario:
(Time to acquire resource and physical resources spent are very low [0.1] because it is given to you by the witch, you didn’t have to work hard to acquire it).
In the second scenario:
(Time to acquire resource and physical resources spent are very low [0.1] because it is given to you by the witch, you didn’t have to work hard to acquire it).
Which is why you chose the water in the first scenario, and the gold in the second. We subconsciously pick the items with the highest value.
The equation outlined is pretty basic and doesn’t consider the balance between long term objectives and short term objectives. Short term is prioritized by default over the long term — so if you plugged these into an equation it might look like this:
This is just a guess, I’m not sure how accurate that is (that equation would require the long term value to be >5x that of the short term to prioritize it. It also rises exponentially the more value there is in the short term).
So what happens when there is no limit to quantity?
No limit to amount of resources it takes to acquire?
The net value of all things shrinks to 0 when there is an unlimited amount of resources. It grows to infinity when the resources it takes to acquire the object of value scales infinitely. Because the difference in likelihood is fixed (0-100%), it doesn't impact the final outcome when you have an infinite quantity or an spend infinite resources trying to acquire.
Value relies on limits
Gold is worth $1,481.67 per ounce. Silver is worth $16.92 per ounce. Copper is worth 23 cents per ounce.
Gold isn’t that useful. Silver and copper are much more conductive (if you’re building hardware) and can replace gold at most things. There really isn’t much utility for gold compared to silver, yet its price is 87x higher. Why?
Number of tonnes on the earth:
- Gold: 170K
- Silver: 1.6M
- Copper: 700M
Despites its lack of utility, gold is much rarer than other metals and thus has a much higher price tag. With unlimited tonnes of each, all metals would lose their value.
Another factor is ease of collection. Diamonds for ex are very difficult to extract compared to a common metal like copper. If copper was near impossible to acquire, even though it's abundant, it's value would be very high.
Recap: we subconsciously create hierarchies of value based on the resources we invested and the affinity of the item. With unlimited resource, there would be no hierarchies of value. Everything would be worth noting.
Affiliation to action: our actions are thus based off that subconscious value assessment.