there is this pervasive assumption in economic theory that if two things have the same price they have the same value in some global sense. To make an obvious example: If you are allergic to peanuts, then the value of a peanut to you is quite extremely different to the value of that same peanut to someone else. This is unaffected by the price of the peanut.

> there is this pervasive assumption in economic theory that if two things have the same price they have the same value in some global sense.

Um... quite exactly the opposite? Very nearly the most basic assumption of all economic theory is that wealth is created through trade (which includes trading labor for a salary) because each party values the thing they are receiving more than the thing they are giving away.

> because each party values the thing they are receiving more than the thing they are giving away.

We're not disagreeing. I think I could have been imprecise. It seems a lot of arguments made by economists who should know better quietly use models which which effectively ignore the "most basic assumption" or average it out, which is a nonsensical operation.

The quantity in question here is "price", not "value". Prices only exist when buyer and seller agree. You're right that values will be different, but I think you've missed the subject of the previous post.

I'd argue that the economic sense distinguishes market price and individual value (market value === marginal consumer value), but that much political-economic rhetoric, particularly from free-market fundamentalists, does not.

This is a faulty argument.

Value to an individual is very different to value to a market.

Value in this sense is the aggregate of the individual values to all of the buyers and all of the sellers.

Price and value only match when supply and demand are at equilibrium.

What aggregate do you use? Mean? Median? Mode? Second moment? Wealth-weighted average? Buying-likelihood weighted average?

How do you avoid Simpson's paradoxes?

You make a good point, but obviously different datasets and scenarios require different methods, and the detail of any approach is less important than starting out with valid assumptions.

If I'm allergic to peanuts and the price of peanuts is $100/pound, the value of a pound of peanuts to me is still $100... because I can sell them and buy something I'm not allergic to.

There are a lot of assumptions required to have that statement be sensical including a lack of transaction fees (including, just, effort - you're assuming the time it takes for you to arrange the purchase and resale is without value) and extreme price stability. 100$ worth of peanuts isn't worthless to someone with a peanut allergy but it is certainly worth less than it is to someone without since to the person with an allergy the only value of peanuts is as a bartering currency.

not really. If you are planning an arbitrage operation, then their resell price (and thus value to you) must be at least MORE than $100, otherwise you wouldn't buying them and going through the hassle and opportunity loss of the arbitrage.

If you don't bother buying them, then the total value to you is probably less than the value of $100 for you.

It's possible that the value just happens to be equal to the value of $100. That's a vanishingly unlikely coincidence.

True. Value to an economist is an aggregate of all the individual’s values. Your individual value is likely to have not influence on the market value (unless you’re buying a lot at a different price).