What price Diamonds?, Wizard Award Winner Options

[Guest_Jox_*]

© Todd Congreve, 2005. I, Todd Congreve, do assert my right to be identified as the author of this work in accordance with Sections 77 and 78 of The Copyrights, Designs And Patents Act, 1988. (Laws of Cymru & England, as recognised by international treaties). This work was simultaneously copyrighted in the United Kingdom of Great Britain and Northern Ireland and the United States of America. This work is posted as an unpublished work in order to elicit critical assistance and other helpful comment, only.

Thanks to Alan, Nina, Fran and Eisa for your crit and comments.

Updated to: 23/06/2005 @ 1719

Ref: TC 0404 AF (22/06/2005)


*Graphic provided by
Celtic Castle Designs

What price diamonds?
[An Economic Paradox*]
by TC

Local food store:
sparkling water -
ninety-nine pence
for five litres -
in a bottle with
carrying handle.

Antwerp jeweller:
cut diamond -
thousands of pounds
for some sparkles -
in a pretty box with
golden flip-top lid.

Ocean lifeboat:            
fresh water -                
everything I own
for a few drops -
in my begging palms:
don’t wrap it.

(end)

===================

Ref: TC 0404 AE

What price diamonds?
[An Economic Paradox*]
by TC

Local food store -
still water:
eighty-seven pence
for five litres -
in a bottle with a
carrying handle.

London jeweller -
cut diamond:
thousands of pounds
for a few gems -
in a pretty box with
golden flip-top lid.

Ocean lifeboat -              
fresh water:                      
everything I own
for anything -
in the palms of my hands:
don’t wrap it.

(end)


A famous old piece of Economics theory is known as the “Water / Diamonds Paradox.” I hope this poem illustrates it.

For the academic...

Virtually all of Economics is predicated upon The Laws of Supply and Demand. Viz: If price is low then supply is low and demand high and if price is high then supply is high and demand low. Wherever demand and supply meet is known as “Equilibrium.” Diamonds and water seem to be able to undermine this. But of course they don’t. This is because demand depends on various factors - price of the good in question (a), prices of all other goods completing for one’s income (b-z), one’s income (Y) and one’s Preferences (“tastes”) (t).

Thus, the demand equation in Economics is: d=p(a)+p(b-z)+Y+t

So the diamonds / water paradox relates to tastes, rather than just prices.

In a life boat we couldn’t care less about diamonds (unless we’ve already gone balmy) but water is vital if we’re ever to see a diamond again. So our relative taste for water vis-a-vis  diamonds is very high. This indicates another aspect in Economics: the less one has of something one wants / needs, then the more one wants it - and the higher price one will bid for it (subject to the demand equation); the more one has of something, the less one is willing to pay for more (again, subject to the demand equation). One thing that makes Economics great fun is that everyone is different - so, unlike the Natural Sciences (Biology, Chemistry and Physics are generally taken to be those these days - plus their off-springs) Social Sciences (Economics, Politics, Ethics) have much more variable data with which to come to terms and construct theories.

Oh? Why a paradox? Simply because usually we’ll usually pay far more for diamonds - Why, when they are far less useful than water, which is, of course, essential? To further understand this concept in Economics we need to investigate Utility Theory - more specifically, marginal utility and particularly, diminishing marginal utility - but such is beyond the scope of this brief explanation.

J.



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[Guest__*]

Dear Jox,

"Oh? Why a paradox? Simply because usually we’ll usually pay far more for diamonds - Why, when they are far less useful than water, which is, of course, essential? To further understand this concept in Economics we need to investigate Utility Theory - more specifically, marginal utility and particularly, diminishing marginal utility - but such is beyond the scope of this brief explanation."

If this last para is not the perfect example of "diminishing marginal utility", then I don't know what is.

I loved the 2nd poem, written within your explanation. Short and sweet :

d=p(a)+p(b-z)+Y+t !

And you say you can'y do ba-dums ....

Now, I will try, to be serious.

Local food store - -- "food" not needed ?
still water:
eighty-seven pence
for five litres -
in a bottle with a -- del "a" x 2
carrying handle.

London jeweller - -- Jeweller's cut diamondS ? London irrelevant
cut diamond:
thousands of pounds
for a few gems -
in a pretty box with
golden flip-top lid. -- I'd say gold, not -en ?

Ocean lifeboat -            -- Mid-ocean ?
fresh water:                      
everything I own
for anything -           -- do you need "-thing" ?
in the palms of my hands:  -- I's say palm of my hand - singular
don’t wrap it.                -- del "it"

This is already minimalist, so I think taking all those words out would impact even more ?

I look forward to your eventual revision.

Personally I can't stand the pretense of the "social" "scientists" that theirs is anything more that gardening, you plant lots, a few come up. Science is all about reproductabilty of results, this lot can barely scratch at the topsoil without getting filthy ....

Love
Alan

PS Very good poem, tho !

[Eisa]

Hi james

This is such a thought provoking poem which has great impact.

Looking through Alan's excellent suggestions I really can add no more, but like most of his ideas to trim this back for even greater impact.

Great read James

Snow

[Guest_Nina_*]

Hi James

Interesting poem comparing the economic value of water and diamonds.  Of course there is a third alternative to your supply and demand Law and that is: if demand is high and supply is low then price will be high and of course the prime example of this is property.

Looking at the poem itself:

Ocean lifeboat -              
fresh water:                      
everything I own
for anything -
in the palms of my hands:
don’t wrap it.

In your third verse you go beyond the simple economic worth to something much more profound.  In fact this verse could possibly stand as a complete poem on its own.  It shows how we take water for granted, never thinking too much about its true value, expecting it always to be "on tap".  We place a false value on "diamonds" and other trappings of our comfortable lives - all our gadgets, cars, status symbols, all wrapped in their pretty boxes and packaging.  In reality material wealth is meaningless and we would not hesitate give everything away, if dying of thirst, for a sip of water placed in the palm of our hands.

The basic needs of life -  food, water, warmth, shelter have a far higher value than all the diamonds in the world.

a couple of suggestions
[add] {delete} (comments)

Local food store -
still water:
eighty-seven pence
for five litres -
in a bottle with {a}
carrying handle.

London jeweller -
cut diamond:
thousands of pounds
for a few gems -
in {a} pretty box with
gold{en} flip-top lid.

Ocean lifeboat -              
fresh water:                      
everything I own
for anything - ( ? perhaps - for a few drops)
in the palms of my hands:
don’t wrap it.  (? perhaps - unwrapped )

Nina

[Guest_Nina_*]

Hi James, Alan

I hadn't a clue what diminishing marginal utility was, so I googled and came up with this site: http://william-king.www.drexel.edu/top/pri...Uch/Eco415.html
I still haven't a clue what diminishing marginal utility is, but I do know the author likes eating pizza on a Thursday evening  :cheer: .

Nina

[Guest_Jox_*]

Hi all,

Thanks for the comments. Sorry I don't have time to reply to all yet so, instead, I thought I'd just pick-up Nina's last question re: DMU. Thanks for the research, Nina. I never imagined people were that interested.

Thanks for the link - when I come back later I'll read how pizzas are experiencing DMU!

The economic concept in question here is really: Utility. In Economics, that means the satisfaction which we gain from consuming something. So a car has utility and so does a cream cake. Even if one hates cars there must be times when one would be useful. However cream cakes vary much more between individuals - I, for one, am not especially fond of them so, for me, cream cakes have a low utility. [NB “Consumption” in Economics means the use of something - not necessarily eating.]

Now, let us take the case of little Billy. He loves cream cakes and has decided to buy some with his pocket money. He actually pays £1 each for them and buys six. However, all six do not return the same utility. Suppose, for example that the first yields ten UUs (Unity of Utility); the second gives satisfaction but rather less then the first - say, perhaps, 8 UUs. The third is not as good (Billy is becoming stuffed) and yields only 4UUs. The fourth is a real effort and yields just a little satisfaction - say 1 UU. The fifth one that greedy Billy stuffs in causes him to vomit - yielding -5 UUs. He never eats the sixth so it has no utility as it was not consumed.

We now have the following table:

Cake   UUs
1        10
2        08
3        04
4        01
5       -05
6       n/a



We can now use another column to represent Total Utility. Thus:

Cake   UUs     TU
1         10      10
2         08      18
3         04      22
4         01      23
5       - 05      18
6        n/a     n/a

We can now construct a fourth column from the differences between the figures in the second. This third column is the Marginal (or change) Utility with each new cake. Thus:

Cake   UUs     TU     mU
1         10        10      +10
2         08        18      +08
3         04        22      +04
4         01        23      +01
5        -05        18      -05
6        n/a       n/a

Strictly speaking the mUs should be shown between the lines but I can't do that in this text-entry box, sorry.

You'll notice that UUs and Mu are the same figures. This is simply because both show the same thing: the change in Total Utility. We regard the Quantity and UU columns as inputs and the TU and MM columns as results.

The real fun comes when we plot the graph of Quantity (horizontal axis) against both TU and mU curves (vertical axis).

TU will build and mU will fall. However, at the point where mU becomes zero, TU will hit its zenith the it, too, will start to diminish.

There are many complex points to be made from this but the simple one is the most important - viz people's utility from consumption rises at a diminishing rate the more of something they consume. At some point they derive no additional utility and then, if they were to consume more of something they would then be worse off in satisfaction than before. My personal name for this point is “The Vomit Line.”

Why does DMU matter?

Because it enables economists to predict how many of a particular good people might buy. Such information is vital in microeconomic analysis of individual businesses and industries. It may also have a role to play in macroeconomic analysis of consumption within the economy.

You might say “it is just common sense” - and it is! It is simply the codification and analysis of something we probably all know if we think about it carefully - that we love the first one we have of something, the second is good but thereafter, we have less of a buzz from subsequent consumption. At some point we simply don’t want any more and thereafter, our total satisfaction declines if we do consume more.

Here endeth the lesson for today. Blessed be St Maynard Keynes.

[Guest_Jox_*]

Hi Nina,

I'm impressed by your link - very accurate; thank you.

What is it you don't understand?

J.

Replies later! Thanks to Alan, Eisa and Nina.

[Guest_Toumai_*]

Dear James,

What a fascinating introduction to this aspect of economic theory. I recall you used a games theory equation (except under some fancy economics name) as the basis for your poem on winter survival (mus retniw)

Love the last line: 'don't wrap it': fantastic!

'still water' made me think of pocheen ... in which case you'd have half-cut diamonds. Would 'bottled water' be healthier?

I am tempted to work out a few equations of my own: statistical and algaebraic interpretations of poetic ideas ... does adding an equation in reply break the MM guidlines?

Love,

Fran

[Guest_Nina_*]

Hi James

I'm impressed by your link - very accurate; thank you.
thank you, I like googling for information (btw it is still bugging me that I haven't been able to find a link for you for the splashing, dashing poem)

What is it you don't understand?
well for a start off, I don't understand why anyone would want to eat one cream cake let alone 3 or 4, urgh!  I hate cream (and milk).  Seriously though, I didn't have time to read it properly hence the reason I didn't understand.  This theory would't work though if Billy bought chocolate and ate a few pieces a day.  His enjoyment would stay constant (and he wouldn't get so fat or sick).

I don't however, see the relevance of this theory as regards water (an essential that we must have and are supposed to drink a certain amount of each day, not that I ever manage it) and diamonds (a luxury that I would just as much like to have ten of than one, especially on a necklace.

Nina

[Guest_Jox_*]

Hi Alan,

Thanks for your visit and work.

>A>If this last para is not the perfect example of "diminishing marginal utility", then I don't know what is.

emm...

>A>I loved the 2nd poem, written within your explanation. Short and sweet :
d=p(a)+p(b-z)+Y+t !

emmm 2

>A>And you say you can'y do ba-dums ....

emmm 3

>A>Now, I will try, to be serious.

Now you ARE joking!

Just a quick point here - I see you mention minimalism. This poem was far from that. Each line in each verse has a comparable number of syllables to its equivalent in the other verses. (I was experimenting).

-------------------------------------

Local food store - -- "food" not needed ?

>J>This started as "supermarket" but changed to "food store" for syllables. "Local Store" always makes me think of an ironmonger's, not a grocer's.

still water:
eighty-seven pence
for five litres -
in a bottle with a -- del "a" x 2
carrying handle.

>J>If I decide to ditch the syllables I will ditch "a" - thank you.

London jeweller - -- Jeweller's cut diamondS ? London irrelevant

>J> I wanted London as a centre of the diamond trade. Maybe I should use "Amsterdam" instead. "Diamonds" plural is correct - thanks.

cut diamond:
thousands of pounds
for a few gems -
in a pretty box with
golden flip-top lid. -- I'd say gold, not -en ?

>J>No, Gold would confuse - which is the precious subject. Golden as all things that glitter are not gold. Thanks.

Ocean lifeboat -            -- Mid-ocean ?

>J>Why, please?

fresh water:                      
everything I own
for anything -           -- do you need "-thing" ?

>J>Only for syllables, else no.

in the palms of my hands:  -- I's say palm of my hand - singular

>J>Nope thanks - I tried this - water falls-out too easily. (See I get wet for my poetry, dahling).

don’t wrap it.                -- del "it"

>J> I'm torn on that one. I fully see your valid point, though and will think on't.

>A>This is already minimalist, so I think taking all those words out would impact even more ?

>J>Well by my standards this is bloated. Minimalist is two words per line and six lines :) I take your point, thanks - depends if I keep the syllables equal. If not, I'd use many of your suggestions, thanks.

>A>I look forward to your eventual revision.

>J>You make me sound like Dr Who!

>A>Personally I can't stand the pretense of the "social" "scientists" that theirs is anything more that gardening, you plant lots, a few come up. Science is all about reproductabilty of results, this lot can barely scratch at the topsoil without getting filthy ....

>J>Ah! Now that makes sense after all these years. When I was an undergraduate we were warned about the "AMD chaos factor" - casting spokes into valid theories and suspicion on strong science. Glad to see it myself at long last. Anyway glad you enjoyed your gardening Hoe Hoe Hoe!

>J>Thanks, Alan,

J.

[Guest_Nina_*]

Hi James

I didn't know you were counting syllables.  You may as well ignore my suggestions as they'd muck up the counting completely.

Nina

[Guest_Jox_*]

Hi Nina - I keep answering your points out-of-sequence so please prod me if I miss anything.

>N>I didn't know you were counting syllables.  You may as well ignore my suggestions as they'd muck up the counting completely.

Thank you for your kind advice but I shall have to decline it. Sorry. I shall not ignore your suggestions.

Seriously, I wrote this with some words and adjusted for syllables just to see what people who recommend meter would say but obviously it made no difference. My own preference is to have fewer words but I keep experimenting.

The only suggestion of yours I can decline now is "golden" - the boxes are not usually gold. Whilst gold is a colour, too - in this context it could be mistaken for the precious metal.

Anyway, I'll be back to look at your suggestions. thank you, Nina.

J.

[Guest__*]

Dear Jox,

"Ocean lifeboat -            -- Mid-ocean ?

>J>Why, please?"

Well, there ain't really no other kind than ocean lifeboats, while the "mid" would tell us something re location, while still leaving the word ocean in.

If pressed for sylls, "mid-sea lifeboat" ? Not sure.

Love
Alan

[Guest_Nina_*]

Hi James

I'll confuse you even more now, sorry.  

The only suggestion of yours I can decline now is "golden" - the boxes are not usually gold. Whilst gold is a colour, too - in this context it could be mistaken for the precious metal.
ok, I take your point about mistaking gold for the precious metal.  Let me explain my reason for suggesting gold .  In my mind (perhaps erroneously) golden implies a radiance or glow, perhaps something a bit special, like when holiday brochures lure you to the resort with descriptions of miles of golden beaches. Gold as a colour feels much duller.

As ever it is your poem and your choice.

Nina

[Guest_Jox_*]

Hi Nina,

Thanks for re-visiting.

Yes, you have confused me more! (sorry!).... err...

>N>My only reason for suggesting gold instead is because in my mind (perhaps erroneously) golden implies a radiance whereas gold doesn't.

so why is "golden" wrong, then?

Cheers, J.

[Guest_Nina_*]

Hi James

so why is "golden" wrong, then?
urmmmm probably because I am obvioulsy misunderstanding your intention in the description of the lid.
*slips away quickly*



Nina

[Guest_Jox_*]

Hi Eisa,

>E>This is such a thought provoking poem which has great impact.

Thank you. I genuinely hadn't realised that.

>E>Looking through Alan's excellent suggestions I really can add no more, but like most of his ideas to trim this back for even greater impact.

OK, thanks, I'll bear that in mind.

>E>Great read James

Thanks Eisa. Take care,

J

[Guest_Jox_*]

Hi Fran,

Thanks for your visit and comments...

>F>What a fascinating introduction to this aspect of economic theory. I recall you used a games theory equation (except under some fancy economics name) as the basis for your poem on winter survival (Mus Retniw)

Heck! I'd forgotten that - thanks. Game on!

>F>Love the last line: 'don't wrap it': fantastic!

Thank you.

>F>'still water' made me think of Potcheen ...

I might have known!!! (For the less boozy - that is a form of illegal spirit, traditionally distilled on quiet farms and homesteads all over Ireland. Its alcoholic content varied from insane to unsurvivable.)

>F> in which case you'd have half-cut diamonds.

ROFL - No fully-cut methinks.

>F> Would 'bottled water' be healthier?

Will think on't - thank you.

>F>I am tempted to work out a few equations of my own: statistical and algebraic interpretations of poetic ideas ... does adding an equation in reply break the MM guidelines?

Not if you do the same to both sides of the argument.

Thanks Fran!

J.

[Guest_Jox_*]

Hi Alan,

Thanks for your re-visit.

>A>"Ocean lifeboat -            -- Mid-ocean ?
>J>Why, please?"
>A>Well, there ain't really no other kind than ocean lifeboats, while the "mid" would tell us something re location, while still leaving the word ocean in.

I see now. I think, in a strange way, we're agreeing. I used "ocean" to denote location - so to me, "mid" is superfluous. I didn't use "ocean" to mean type of lifeboat - just location. I'll think on't - thank you.

>F>If pressed for sylls, "mid-sea lifeboat" ? Not sure.

Thanks - will be considering.

J.

[Guest_Jox_*]

Hi Nina,

UNFINISHED - will continue ASAP

Thanks for your various visits. I seem to be well out of sequence - here's my reply to your original posting.

>N>Interesting poem comparing the economic value of water and diamonds.  Of course there is a third alternative to your supply and demand Law and that is: if demand is high and supply is low then price will be high and of course the prime example of this is property.

LOL... actually I did mention that (the demand and supply theory, not the specific property example)...

>J>Virtually all of Economics is predicated upon The Laws of Supply and Demand. Viz: If price is low then supply is low and demand high and if price is high then supply is high and demand low. Wherever demand and supply meet is known as “Equilibrium.”

1. D>S 1: House prices are traditionally low. When I was a youngster my parents were still living with my grandmother in rented accommodation because we could not afford to buy our own house (my grandparents had never been able to afford theirs - and my Grandfather was an accountant). It was fourteen years into their marriage before they could afford to take-out a mortgage (1967). Now most youngsters expect to take a mortgage ASAP. In recent years there has been a slight reversal of this whereby house prices vis-à-vis incomes have risen again (especially in SE England). But historically they remain low. Proof of this is in the fact that the UK has one of the highest owner-occupation rates in the World.

2. D>S 2: I only showed the demand equation. There is a corresponding supply equation. In the UK we've run out of land in the SE so supply is limited - which is why house prices are now rising again (as mentioned above). But this also means price is comparatively low - if, say, the minimum house price was £1 million, then demand would be far lower than it is now. So prices will continue to rise until either more supply becomes available or sufficient demand has been removed from the market. This addresses your point, above, I think, but was covered in my original answer, too.

A couple more points about The Laws of Supply & Demand:

1 Demand is the ability and willingness to buy something
2 Supply is the ability and willingness to provide something.

Demand is NOT need. Sure people need accommodation - but unless they have the ability and willingness to pay for it, they are not part of demand. Many people think this is hard-hearted. It isn't. Economics is amoral. We could not calculate anything meaningful if we simply asked "Who would like...?" or "Who needs...?" To be able to assess demand and supply we use "bids" and they are offers of money in exchange for offers of goods or services.

So does Economics ignore those who need accommodation? No, not at all. There are many ways in which Economics examines such problems - two being Welfare Economics ("How to make people better off Economics") and CBA - Cost-Benefit Analysis - usually applied to large public projects - airports, Olympic bids, housing estates etc.

But this poem was firmly about an aspect of demand and supply - so I focussed on that.

>N>Looking at the poem itself: a couple of suggestions [add] {delete} (comments)

Ocean lifeboat -              
fresh water:                      
everything I own
for anything -
in the palms of my hands:
don’t wrap it.

>N>In your third verse you go beyond the simple economic worth

I love that phrase! :)

>N> to something much more profound.  In fact this verse could possibly stand as a complete poem on its own.  It shows how we take water for granted, never thinking too much about its true value, expecting it always to be "on tap".  We place a false value on "diamonds" and other trappings of our comfortable lives - all our gadgets, cars, status symbols, all wrapped in their pretty boxes and packaging.  In reality material wealth is meaningless and we would not hesitate give everything away, if dying of thirst, for a sip of water placed in the palm of our hands.

Thank you very much. I appreciate what you say. In fact all that does come well within the scope of Economics (as I hope the poem illustrates) - but as you indicate also embraces morals, ethics and philosophy. (All in the Social Science area).

>N>The basic needs of life -  food, water, warmth, shelter have a far higher value than all the diamonds in the world.

There is a pyramid of wants which we use in Economics - the things you mention are very near the base - meaning most essential. Diamonds are near the top - aspirational luxuries. Western sociaty is able to address many of the higher points in the pyramis. (The lowest item, by the way - at the very base - is air).

Local food store -
still water:
eighty-seven pence
for five litres -
in a bottle with {a}
carrying handle.

London jeweller -
cut diamond:
thousands of pounds
for a few gems -
in {a} pretty box with
gold{en} flip-top lid.

Thanks for the gold / golden debate. To me golden is flashier - more conspicuous - than Gold itself, which is actually quite a mellow yellow. So I was trying to indicate a tawdry wealth by using "golden" not "gold." Also, "Gold" would, I feel compete with diamonds as the centre of the rich side of this poem.

Thanks for carefully explaining this to me both here and in aPM - much appreciated.

Ocean lifeboat -              
fresh water:                      
everything I own
for anything - ( ? perhaps - for a few drops)

Thanks - will think about that.

in the palms of my hands:
don’t wrap it.  (? perhaps - unwrapped )

I think I’ll retain the original cliche but I forgot to italicise it for satirical impact - will do that. Thanks for the reminder.

Nina, I used syllables as an experiment, as I said - but Alan has shown they didn’t work because he suggests changes. I was trying to see (as I have before -0 with similar results) - if syllables can be a substitute for the seemingly unattainable ba-dums. Alan’s reply shown they cannot. So I may well update this poem next to my usual style and pare. if so, I shall use your suggestions for that - thank you.

Thanks Nina - your comments etc are very much appreciated,

J.