Putting a price on real value

Price signals saturate your vision, but value is what you see when you see clearly

Banquets, balls, baby clothes, and bedrooms

Price is a proxy for value in certain conditions… these are far rarer than we believe

Things that cost a lot are crappy substitutes for things that mean a lot. But as long as we see external prices more clearly than internal benefits, the con will continue to consume resources for no reward. Here are four short stories that demonstrate this.


I’m dining in a private room in one of the swankiest restaurants in London. Around me, the thick scent of leather and mahogany. In front of me, food both delicate and demanding of reverence; each of the seven courses dances on the tastebuds with a commanding balletic grace.

The same cannot be said of my dining companions. At least they’re paying. And at least I get to claim two hours of Continuing Professional Development points, which’ll save me pretending to have learnt about investments some other way later on.

The food’s not really free, of course. Nor is it really being paid for by the designated driver of the company card. It’s sponsored by the investors in the fund whose managers are trying to sell said fund to my firm. And of course the vampiric ability of fund managers to suck the time out of me and the life out of that time ensures I’m paying in other ways, foolishly unaccounted for when accepting the invitation to a ‘free’ feed.

The empty suits the fund-management firm has plucked off the conveyor belt are talking about the size of the fund, the manager’s track record, and other stuff with zero bearing on the likely future performance of the investments. Past performance is no guarantee of future performance, and the quality of a chap’s tailor and public-school debate coach are no guarantee of the quality of his ability to guess what’s going to happen to a company’s share price relative to what the rest of the world thinks is going to happen to it. They know this. They know I know this. They also know that I can’t just add their funds to our portfolios even if I wanted to.

The empty suits don’t care. They’re zombies: ‘both insatiable and insubstantial, everything they eat seems to go straight through them’.[i] They’re a living metaphor for how our desperate search for security is continually crushed by the foolish belief that psychological needs can be met by material consumption. They’re here because they can be and because one of their KPIs is meetings with advisers, however pointless. Their investors are wasting money paying them; there’s little harm in wasting it in return.

Not that the food isn’t great. I love a bit of Michelin-graded grub as much as the next man. Actually, the next man is Steve, a colleague with a penchant for Pizza Express and a mystifying tendency to order his steaks well-done. I love it more than him.

One of the best evenings I ever had involved dining in a truly terrible restaurant. The company was good, so it didn’t matter. Crucially, the evening wouldn’t’ve been any better – it wouldn’t’ve added anything more to the Goodness of my life – if it had been somewhere ten times the price. Good meals with terrible company are better than bad meals with terrible company. This does not mean seek out good meals over bad ones (which would assume the terribleness of the company somehow had to be taken as given). It means seek out good company.

When the company is good enough, as long as you’re not being poisoned, the only thing that correlates with the price of whatever you’re consuming is your inability to do other stuff with it. Recall that standard of living does not equal cost of living and quality of life does not equal access to comfort.

There are people who spend fortunes every year on eating out, without it adding anything to their quality of life. We know this just as we know polo isn’t ‘better’ than pool – and yet most of us forget it the second someone dangles a ‘free’ £100-a-head meal in front of our maladjusted maws. I did.

Price is a proxy for value where the thing you’re buying isn’t interacting in any meaningful way with your humanity. Dining with fellow humans does not fall into this category.

Nothing you consume is a substitute for anything you connect with. Where the human connection you are ultimately seeking exists, costly consumables are irrelevant to your enjoyment of an experience. To be inside the heads and bank statements of the rich is to confirm beyond doubt that just because you can, it doesn't mean you should.

Selling ourselves to crappy but expensive substitutes is a recurring consequence of our self-deceptive tendencies. We blindly rush to meet needs with stuff we’re promised will work, but never does… but because we’re deceiving ourselves, we fail to connect our blindness to our failure to find fulfilment, and so don’t do the work required to bugger it up a bit less next time.

The process of finding fulfilment can feel frustrating, flummoxing, and just too damn fluctuating. But the flux is inevitable, so it’s a crap excuse for grabbing at substitutes that promise solidity, while delivering only decay.


Where there is no real interaction with the narrative of your existence, an important difference in quality, and it’s obvious you get what you pay for, using price as a proxy is a much safer move.

For example, cricket balls. There are only a handful of manufacturers of cricket balls, each of whom make a range of balls at different price points.

While different companies’ balls do have certain differentiating characteristics, they only really matter at the very top end. For non-professional players, the branding is borderline irrelevant.

Selecting a ball is not simply a matter of choosing the cheapest one. Using a bad ball can be very costly, because it’s made of all sorts of crap that can break cricket bats – and bats are rather more expensive than balls. The cheapest options are usually to be avoided.

But you can’t see inside cricket balls, so price is a decent guide to whether they’re full of things cricket balls should be full of, or whether they’re full of bat-breaking badness.

Baby clothes

De Beers are often credited with the greatest marketing stunt in history by linking diamonds and a punchy pricing equation to a man's love of his bride to be. For a single company, that's probably true. But as a wider industry, baby clothes takes some beating. Possibly only weddings can match it.

In analysing the expenditure of a couple of potential clients one day – let’s call them Zara and James – something jumped out: the amounts spent at what Google told me was a boutique baby store on one of London’s priciest shopping streets. What on earth cost so much, I asked, not with opprobrium, but pure fascination.

I am still somewhat in shock. Not at the itemisation of the bill (which was truly shocking) but at what happened next…

Because with no additional prompting, Zara started to cry. The question had unlocked something that had been bubbling away for, apparently, ages. Through the tears, she explained that she knew the items were pointless. She knew they weren’t ‘better’ than alternatively branded substitutes. She knew the badge didn’t represent how much she cared for the child. And was pretty sure baby wasn’t all that bothered either. And yet she kept going back. Because she could. And what sort of reason was that?

Wasn’t it weird, I wondered (but did not say out loud) that the world – both in this way, and a million other subtler ones, fit to cater for the less heavy of wallet – was wired to believe how much it spends on something is a sign of that thing's value, and only the exceptionally rare are confident enough in their love for, or at least their responsibility towards, their children, that essentially everyone ends up filling prams and spare rooms with mountains of pointless plastic crap? For lots of people, it’s like knowing the pitfalls of the price-value theory even excuses them from putting the theory into practice.

If anything, things go even more screwy when we buy stuff for others. When did we get so bad at expressing our appreciation for other people without getting the accountants involved?


We’ve already seen[1] houses, despite being the biggest purchase most people will ever make, are often subject to the dumbest decision-making, starting from the very first question anyone has when shopping for one: ‘What’s your budget?’ Not, ‘What do you want?’ but ‘What’s the most expensive thing I can afford (with help from the bank)?’

To do this is of course to assume that more expensive is better. Even though the best way to get a great deal on a house is to have idiosyncratic tastes. If you value things that others don’t (which in some way everybody does, if only they’ll let themselves admit it) you get to be happier in a home that costs less. Instead, we blindly lurch for the priciest thing on the menu, and remain ignorant to the possibility that we could have had all our wants met with a side-order of retiring 20 years earlier, or having the freedom to move into more fulfilling work, if the opportunity arose, and a host of other incredibly valuable things aside. As I wrote above:

Houses are especially complex because a single object is used to meet myriad needs. […] We’ve trained ourselves to unthinkingly reduce everything to a number, so we instinctively collapse inescapably complex decisions into simplistic shortcuts to mistaken conclusions. […] There’s often a fine line between stuff that says something important about oneself and stuff that says, crudely, ‘look at what I can afford’. We attach ourselves so enthusiastically to the latter that we’re prepared to not only spend all our resources on it, but to borrow some more and make a leveraged all-in bet on it too.

And as Rory Sutherland wrote elsewhere:

Logic would suggest that, as house prices in London continue to rise, many Londoners who do not need to live in the city would decide to buy houses further away, gaining from price rises and relaxing the pressure on the market. In reality it seems the opposite happens: when sitting on a rising asset, people who would secretly prefer to move 50 or 200 miles away from London are reluctant to, for fear either that they will miss out on future price increases or that, once they leave, they will be unable to afford to move back again.[ii]

The possibility of maybe one day wanting to move back cannot be completely discounted, but if you’d definitely prefer to move out now, then it’s weird to give priority to something that may well never happen.

Pointing and laughing at this is one thing: these people forget that life is about living, not waiting, that ‘here and now’ is the only time we ever get to experience, that when is this situation not going to be true, so when are they actually going to prioritise their priorities… and so on. But if we’re going to do anything about it, and avoid making such dumb mistakes ourselves, we’ve got to understand why we make them in the first place.

We make them because we live in Price World. Unsure of our own priorities, rather than work out what they are, learn how to see more clearly, and make wiser trades, we take our cues from supposedly ‘objective’ substitutes. But unless we’re buying cricket balls, all this does is deny our humanity, and waste our lives.

Welcome to Valueville, population: nearly no one

Put price in its place: it’s a facilitator of trade, not a guide to the good life

In this section, I’ve argued that price, as a function of the world’s supply and demand of something, is irrelevant to determining how much something is worth to you, in terms of how likely it is to make your life any better, and what is worth trading to make that happen. I’ve argued that using price as a proxy for value is idiotic, and, by virtue of the self-deceptive and self-destructive manner in which we do it, dangerously so.

Not everyone agrees with this. Investment author Daniel Crosby argues that: ‘This tendency to conflate price with quality may lead us to overpay for clothing, cars or coffee, but is overall fairly harmless in terms of our retail purchases.’[iii]

This holds only for a view of the world so narrow that it becomes inhuman. Those retail purchases are both shapers and expressions of a life. To see them as harmless is akin to seeing the odd racist comment or slightly authoritarian law change as harmless. The biggest dangers are always the ones that creep up on us, because we can respond, but don’t until it’s too late. Before we know it, we’re taking a pineapple for a walk.

Every time you act upon the belief that the price to the world is a fair proxy for the value to you, you wire yourself to see life through an unhelpful lens. Each action, each thought, is a vote for an unexamined life. To focus on value, by contrast, is to force an examination and evaluation of the underlying emotional rewards being sought.

The problem is not the unworn clothes in the closet, but the unworn paths in your mind that shape your understanding of yourself, others, the world, and how they all fit and flow together. All these self-deceptive substitutes add up to a self-destructive life… constantly trying the same thing to ease the same worries, and solve the same problems, all the while not noticing that they are the same. To waste your money, time, and energy is to waste your life.

Regardless of the size of those resources, you have only one life in which to use them. To default to owning everything, ‘just in case’, to cover all bases, is not to guarantee Goodness, it’s to dilute it. They’re taking up space for a limited number of self-expressive experiences, the average quality of which determine the quality of your life.

The obsession with ownership votes for a world with a fixed, certain future. But however many votes you cast, this is not an election you can win… so ultimately you’re voting for dissatisfaction, and yet despite this every vote makes it more likely you’ll vote for it again next time. If that doesn’t count as madness, I’m not sure what does.

We use price signals to dodge having to think, yet it is only through thinking that we can make reliably good life choices. Price is illusory value. The art of the con artist is to make the illusion appear real, by narrowing worldviews and leveraging vanity. But value is a holistic human experience. Price is an incidental snapshot. True value is in your veins, not your vanity. As Thich Nhat Hanh wrote in The Art of Living:

We don’t feel fulfilled in the here and now, and so we run after all kinds of things we think will make us happier. We sacrifice our life chasing after objects of craving or striving for success in our work or studies. We chase after our life’s dream and yet lose ourselves along the way. […] Living each moment as a way to realize our dreams, there is no difference between the end and the means.[iv]

Price is a signal, but of the market, not meaning. In subjective terms it isn’t signal, but noise. Good trades requiring reading the wine list from left to right. Of determining what you want before you determine how much you’re able to pay for it. If you make trades without knowing what you value, you’ll be in the position of a Tourette’s sufferer at an auction.

Advisers, wanting to help, but not only living in Price World themselves, but acting as its guardians, often make seeing clearly harder still. They’ve read the books. They can recite the soundbites. They know the theory. But they struggle to see the subtler roots of their language that prevent them putting it into practice.

Advisers, enthralled by the exotic, encourage the sort of behaviour we’ve all met at least once. The person that can’t escape telling you, or non-subtly hinting at how much something cost, even if that cost has zero bearing on the value of the experience, be it eating an Emu egg, sleeping somewhere unusual, or telling the time.

If the value you attribute to something is affected by the price you paid for it, then a rich person struggles to feel as good about an experience as a poor person… their expectations are unhelpfully high, and they’ve a greater inclination to a fear of missing out on the other things that could have been subbed in for the same cost.

They are more deeply stuck in having mode, unable to embrace the extra opportunity they have to become.

The traditional finance answer to this is to appease it. The philosophical one is to seek to understand the story being told, challenge it, and, if it’s found wanting, change it.

‘The height of ability,’ wrote La Rochefoucauld, ‘consists in a thorough knowledge of the true value of things.’ Just as the ability to spend money comes with the responsibility to spend it wisely, so does the ability to live well come with the responsibility to focus on value amid a blizzard of price tags.

The only price worth paying

Practical steps to wire yourself to focus on value, not price tags

This, like all step-by-step instructions sections, is being saved for the published version of this book.

page↓ Coming Soon ↓

I hope you found this useful. If you did, sign up to get regular insights in your inbox. If you didn't, sign up to get extra content as redress.

Have something to say? Go here. Witty comments welcomed. Insightful ones win prizes. Reading guaranteed. Replying not.


[1] Part 2, Section 2.1.2, ‘Are you reading the wine list the wrong way around?’


[i] John Vervaeke, Christopher Mastropietro, and Filip Miscevi, Zombies in Western Culture: A Twenty-First Century Crisis

[ii] Rory Sutherland, Alchemy

[iii] Daniel Crosby, The Laws of Wealth

[iv] Thich Nhat Hanh, The Art of Living

Last updated