The Value of Common Resources

In this week’s class, I found the “Paradox of Value” very interesting. Water is more valuable than diamonds, but diamonds cost more. The idea seems to contradict itself, and although it is easy to see why water is more valuable to us, I understand why this concept baffled economists.

To explain the Paradox of Value, we need to look at the difference between total utility and marginal utility. Total utility is the total amount of utility received over every unit purchased, while marginal utility is the additional utility gained from consuming one more unit. Basically, total utility is your overall utility and marginal is just in the context of only one more of a unit. But how does this relate to water and diamonds? It’s simple: Even though water has a low marginal utilty, it has a higher total utility than diamonds…therefore water is more valuable.

I began thinking about the irreplaceable value of water, even though it is cheap. It seems the most valuable things that are essential to human life happen to be for the most part, common resources. Water, trees and plants, and air all all goods that we cannot really prevent someone from consuming, yet each use reduces the amount available in the future. This made me think of the concept of the “Tragedy of the Commons.”

In conclusion, why is it the most valuable resources, way more valuable than the most expensive clothes or cars, are basically being squandered and overexploited as if they were useless? I think that people should take a deeper look at the “Paradox of Value” and remember what is truly essential to life before they go overusing precious resources for an larger profit strictly in the short run.