The Value of Things

Recently, I've been interested in the monetary value of things. What makes one car worth $200,000, while another only $20,000? What drives the real estate market? What is the value of the shirt that you're wearing? Why does a stock price soar and drop? I am no economist, but I feel that monetary value is artificial- although it can be influenced by market forces, it is something assigned by human beings, and is dependent on a human-created system. Joel Achenbach says this about a Picasso in his latest blog:

There's an anecdote about Picasso, possibly apocryphal, that illustrates the phenomenon. An art dealer was trying to sell a painting by Picasso to a potential buyer. The buyer said he wasn't sure of its authenticity, and wanted the artist himself to vouch for it. Picasso was summoned. He looked at the painting and said it was a fake. The buyer left. The dealer was perplexed. He turned to Picasso and said, "Didn't you tell me yourself that you painted it?" "I did," said Picasso. "I often paint fakes."

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Also, I remember an interesting experiment started last year that examined the value of art. The artist, Sala, set a pricing system for 1000 paintings (of the numbers 1 to 1000) which gave incentive for people to buy early. He created artificial demand. The site also has links to other related experiments.