Definitions for TrueValueMetrics
Value ... Elements of Value
Importance of value. Value is the driver of quality of life ... society will be at its best when the available resources are used with a maximum of productivity. A measure like money profit, or cash flow is important for simple sustainability ... but it is the mix of value and profit rather than just profit alone that determines how well society and the economy will perform now and into the future.
What value has value The idea of the value of value is very difficult. It is particularly difficult to include in any analysis when “value” is perceived differently by almost every individual. Value is personal in the extreme! However, to ignore value as an critical measure means that the results of analysis are essentially meaningless.
Value quantification. If there was an easy way to quantify value, then it would very much easier to make use of 'value' as a parameter of decision making. TVM does value quantification using a methodology that may well have its origins in the Analystical Hyerarchical Process of the 1980s.
Price and value. Market price is not a good proxy for value. For some goods and services, price may approximate value, but this is not true more often than it is true. The difference creates important and dangerous distortion on socio-economic decision making which explains some and maybe nearly all of the dysfunction of the modern capitalist laissez faire market economy.
Standard value. TVM uses standard value to account for value flows in a simple and relevant way. Standard value is a concept derived from standard cost accounting. In TVM, everything has a standard value ... a best estimate of what the value is based on what is known.
Global standard value. From one perspective the same thing should have the same value everywhere on the planet ... and for this TVM has a global standard value. This is prepared based on a lot of input, but in the end it is a dataset that nobody will relate to ... and for very good reason. People and cultures are very different from place to place.
For example ... good health has a value ... but people are uncomfortable putting a money number to define a value like this.
Community standard value. The typical community usually has a reasonably common view of value that is based on cultural norms and the traditions of the community. Comparative study of the standard value profile of one community compared to another is a powerful tool for improving understanding about how progress may be optimized.
Ranking of community standard values A ranking of community standard values helps to clarify a lot about the relevance of the quantification. What people think in terms of ranking should also be reflected in how the assigned money numbers are also showing.
Comparisons. There is a lot to be learned from comparison of the various standard value datasets.
- When the value rankings of different communities are compared it is possible to see how various factors change the perception of value ... maybe going beyond the anticipated issues of culture.
- The value standards for the community standard may be compared against the global standard profile to understand where the community is relative to the global average