This post answers the question posed by "What is Value?" which was posted 10/27 #(196).

Value is "the present worth of future benefits" (Appr.Inst. 1993. Dictionary of Real Estate Appraisal. Chicago, Appr.Inst., p.384) or "the anticipation of benefits to be obtained in the future" (Appr.Inst. 1992. The Appraisal of Real Estate. Chicago, Appr.Inst., pp. 18, 422 cit. Fisher).

This definition considers that value is derived from utility, "the ability of a product to satisfy human wants, needs or desires," that is to be useful or to provide benefits (Appr.Inst. 1993, p.383; Appr.Inst. 1992, p.24; Black, Henry Campbell, 1990. Black's Law Dictionary, 6th Edition. St. Paul, MN, West Publishing Co., p. 1551; Gregory, G. Robinson 1987. Resource Economics for Foresters. NY, John Wiley and Sons, p.273.)

Value is not a physical characteristic and cannot be directly measured. "Value is extrinsic to the commodity, good or service to which it is ascribed; it is created in the minds...of individuals." (Appr.Inst. 1992, p.24) "From Aristotle's contention that the good, the true, and the beautiful hold value, to Aquinas' concern with morality to [Adam] Smith's equating value with production costs, we find that value is determined in the eye of the beholder." (Smith, Halbert C. and Jerry D. Belloit 1987. Real Estate Appraisal. Dayton, OH, Century VII Publishing Co., p. 4) Thus value is described as "anthropocentric" (Kengen, Sebastiano 1997. Forest Valuation for Forest Decision Makers: Lessons of Experience and Proposals for Improvement. Rome: Food and Agriculture Organization of the United Nations, p. 11) and as "human perception" (Davis, Kenneth P. and K. Norman Johnson 1987. Forest Management, 3rd Edition. NY, McGraw-Hill, p. 371). Simply, there must be a beneficiary to experience or recognize the utility.

Many of the posts suggested or complained that value is subjective or anthropocentric or related to human perception. All true, at least in an appraisal context where we consider monetary value. Money and monetary value are social constructs. They are distinguished from biological or ecological importance or physically measurable function. Thus appraisable value is extrinsic and requires a beneficiary.

Utility should not be confused with usefulness or use in the traditional sense. Benefits may be recognized in "non-use" or "existence." (Klemperer. W. David 1996. Forest Resource Economics and Finance. NY, McGraw-Hill, p.349) Thus the definition of value as the present worth of future benefits is broad enough to accomodate the various concepts of ecological value, whether to society or an academic theory or the great druid or the earth goddess or squirrels or particular fungi or any beneficiary. Appraisal models can be crafted to address any situation. But the model must specify the beneficiary and a specifc definition of value and consider facts accordingly.

Some of the posts talked about function. Function is key but must be understood as beneficial or appreciated function as distinguished from physically measureable function.

The HBU thread introduced the future. Understanding Value as the present worth of future benefits, value must always consider the future. Something has worth today if it has a remaining beneficial life. The duration of that life and the level and pattern of benefits determine value. A season ticket to 25 games is worth x. A ticket to tonight's game is worth x/25. A ticket to last night's game is worth 0.

The specifc defintions of value (market value, use value, existence value, insurance value, etc.) all flow from this basic, generic definition.

Reply to post by Scott Cullen, on November 18, 1998 at 17:12:43:

Paste that into your article/book, and label it Chapter 1.

>>But the model must specify the beneficiary and a specifc definition of value and consider facts accordingly.>A season ticket to 25 games is worth x. A ticket to tonight's game is worth x/25.<<

Unless the season ticket is to Phildelphia Eagles games, in which case it should be considered a liability with negative value.

Reply to post by Russ Carlson, on November 18, 1998 at 17:12:43:

An insightful analysis Russ. Am I correct in assuming you reached your opinion through proper application of TF (Ticket Formula) method?

You determined that the retail replacement cost of 25 tickets was y, that the wholsesale replacement cost for a season ticket including 25 games was x (each based on estimates from three ticket sellers). You defined the date of appraisal as 1998 and the applicable future benefits period as the 98-99 season. You determined that the species rating for 98-99 PE's is pretty low as is the condition rating. The contribution to fan enjoyment rating is 0. So the depreciated value is 0. You then checked and found that there will be no residual or salvage value for the tickets (used or unused) as sports memorabilia. You then deducted the opportunity cost (lost interest on the cost of tickets if invested in a worthwhile way) to arrive at a negative value estimate.

Text book case!

Reply to post by Scott Cullen, on November 18, 1998 at 19:58:55:

Actually, I just asked the local scalper, who lamented the fact that not only was he out a few grand for worthless tickets, but his bookie was after him to pay up.....

Reply to post by Scott Cullen, on November 18, 1998 at 17:12:43:

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