What is the value of a single dollar?
Image Source: Radio Canada International
1. A brass coloured coin.
The loonie, as it is referred to in Canada, is composed of multi-ply brass plated steel material as of 2012, though it was historically composed of nickel and bronze. Like all other types of cash, the loonie is what is known as ‘fiat money’, meaning its value is determined by people’s perception of it. This is different from ‘commodity money’ which is a type of money based on the underlying value of a particular commodity. For example, beaver pelts, corn or chocolate being traded for other goods.
The value of a commodity is defined by the fact that it is valuable. This creates an interesting dilemma for fiat money — the only reason that it still holds value is because there is a consensus in society that ‘one loonie coin = $1’. This is sometimes referred to as the ‘Tinkerbell effect’ because its value relies on the faith of the people. In the hypothetical case that everyone ‘decided’ that a loonie wasn’t worth anything anymore, it would indeed be worthless. But until that happens, I would recommend holding onto your cash.
2. A song downloaded (legally) online.
Though the majority of people find ways around paying for music, the traditional value of a 4 minute song is thought to hover around a dollar, and the reasons for this are extremely complicated. What begins as a simple audio recording passes through the hands of producers, distributors, manufacturers, retailers, and record labels. By the time the song goes up on iTunes or Spotify, the artist can be expected to make around 6 or 7 cents from it… or at least in theory.
When considering the cost of hiring a manager, buying equipment, getting recording time, splitting the pay between several band members, 6 or 7 cents is an extremely optimistic estimate. Not surprisingly, many musicians cannot afford to simply release albums as they did in the past, relying on touring, merchandise, or self-branding to pay the bills. Still, a small percentage of artists (like Drake, Coldplay, and Beyoncé) who’ve made a name for themselves have an easier time than others. Ultimately, the perceived value of a song has changed from a set price to an abstract idea that depends on its overall popularity and the ebb and flow of cultural tides.
3. One of these paintings.
Image Source: The Culture Trip
The artist is a man named Sadaharu Horio. During an art festival called the Armory Show in Manhattan, Horio spent several days inside a makeshift vending machine, in which he made $1 paintings. Passerbyers would pick from 20 different paintings, and have a copy of it appear at the bottom of the machine. Horio decided to create these works of art to make a statement about art and the market that surrounds it today.
Like music, visual art finds itself on the front lines of giving value to itself in the changing cultural landscape. We live in a world where a painting by Picasso can go for $106.5 million, and thousands of (debatably better) paintings can go for a few hundred. While you could technically argue that art is a type of commodity with intrinsic value, how this value is defined is in the mind of the beholder.
4. Approximately 2.45 minutes of time.
Time is perhaps the most mysterious and controversial things to ascribe value to. Unlike a commodity, it cannot be saved, and it drains continuously as you go about your day to day business. Unlike art or music, there is a general consensus that it has value. After all, time is needed for everything, time is everything. And yet, from a purely economical point of view, we can ascribe a value to our time. Usually this quantity is based on income: 2.45 minutes is the amount of time the average Canadian would have to work to generate a dollar of income.
But this doesn’t solve everything. Often, a distinction is made between how much money your time is literally worth (which depends on where you work) and the amount of money that you believe your time is worth (for example, how much you would pay for 2.45 minutes of free time). Obviously the second definition is a lot more subjective. If I gave up everything, moved out into the forest and lived off the land, putting a price on time would seem ridiculous.
On the other hand, if I worked a 9-5 job at a successful company I might have a pretty good idea of what my time may be worth. That being said, if I was having an extremely busy week, I would probably consider my time to be worth a lot more than if I had a lot of free time.
So what’s the point?
Money is an abstract concept and these four examples act as a kind of thought experiment for acknowledging the ways we ascribe value to things in our lives. Attempting to translate your money into commodities, art, and time is an exercise that borders on absurdity but having an understanding of what things you truly value can help simplify the chaos of everyday life. Ultimately, it is not money that defines success but value. Translating this value is up to you.