On 12/11/2010 12:14, Sylvia Else wrote:
On 12/11/2010 9:14 PM, wrote:
In sci.skeptic Sylvia wrote:
You're conflating cost, price and value. They're distinct concepts.

Obvioustly. Hence my referce to to part they individually play in
standard supply/demand theory. You either accept that theory or do not.

If you do, then your "deductions" from prices are incorrect.

If you do not, then you admit that prices have little to do with
supply or demand. I.e. prices are even more arbitrary than the
simple thory would have it. If so, then your "deductions" from
prices are more incorrect.

[some economics 101 definitions]

You're just lowering the bar.


The market determines where the price lies between cost and value, but
the price still has to lie between them. If it doesn't then either
sellers are losing money on the sales, or purchasers are paying more
than they believe the thing is worth. Neither scenario is going to occur
in the normal way of things. People sometimes make mistakes, and
sometimes things are sold below cost or bought above value for ulterior
motives, but in the main stream the price cannot lie outside the limits
of cost and value, because people are not that stupid.

They are *exactly* that stupid. I take it that you have never heard of
any of the "Designer" Brandname products that are priced way beyond
their intrinsic value or cost to manufacture. People will pay insane
amounts of money for a trendy "Name" on their clothes, perfume etc.

It isn't hard to find people paying more than something is worth on eBay
when they get hooked on excitement of the auction. In some cases they
end up paying more than the new price when shipping is included!

On the other side of the equation the original Mini Cooper MkI lost the
BMC company money for every one sold - clearly not sustainable. And the
telecoms industry is still recovering from its irrational exhuberence in
bidding way over the odds for European 3G telecoms licences.

http://en.wikipedia.org/wiki/Telecoms_crash

A much earlier example of irrational market exhuberance that is far
enough back that it can be looked at fairly dispassionately now is the
Dutch tulip mania of the 1600's where single tulip bulbs were at one
time valued to be worth more than a house. History is littered with such
examples of greed and stupidity combined in equal measure.

http://en.wikipedia.org/wiki/Tulip_mania

The recent banking crisis has similar roots (greed, stupidity and herd
instinct) in trading CDOs. As did the crash 80 years earlier and the one
another 80 years before that. The latter even came with a stern letter
from the Bank of England to the merchant bankers about their errant
ways. Nothing really changes only players get replaced.

Regards,
Martin Brown

On 12/11/2010 11:43 PM, Martin Brown wrote:
On 12/11/2010 12:14, Sylvia Else wrote:
On 12/11/2010 9:14 PM, wrote:
In sci.skeptic Sylvia wrote:
You're conflating cost, price and value. They're distinct concepts.

Obvioustly. Hence my referce to to part they individually play in
standard supply/demand theory. You either accept that theory or do not.

If you do, then your "deductions" from prices are incorrect.

If you do not, then you admit that prices have little to do with
supply or demand. I.e. prices are even more arbitrary than the
simple thory would have it. If so, then your "deductions" from
prices are more incorrect.

[some economics 101 definitions]

You're just lowering the bar.


The market determines where the price lies between cost and value, but
the price still has to lie between them. If it doesn't then either
sellers are losing money on the sales, or purchasers are paying more
than they believe the thing is worth. Neither scenario is going to occur
in the normal way of things. People sometimes make mistakes, and
sometimes things are sold below cost or bought above value for ulterior
motives, but in the main stream the price cannot lie outside the limits
of cost and value, because people are not that stupid.

They are *exactly* that stupid. I take it that you have never heard of
any of the "Designer" Brandname products that are priced way beyond
their intrinsic value or cost to manufacture. People will pay insane
amounts of money for a trendy "Name" on their clothes, perfume etc.

What you're saying is that people have different notions from you as to
value, and I'm inclined to agree that the values people attach to some
products beggars belief. But people people don't pay above the value
they perceive.

A person may buy a rainwater tank because it makes them feel green (and
they like that feeling). If they do that, then that feeling is what
makes the value higher for them.

But if they're simply trying to obtain their water for the lowest
possible expenditure, which is the situation we're discussing, then the
value is the lowest price they can get, and desalinators will win over
rainwater tanks because it is not possible for rainwater tank makers to
offer a price that competes with desalination. Any price that would
compete would be below the cost.

Sylvia.

In sci.skeptic Sylvia Else wrote:
[...]
But if they're simply trying to obtain their water for the lowest
possible expenditure, which is the situation we're discussing, then the
value is the lowest price they can get, and desalinators will win over
rainwater tanks because it is not possible for rainwater tank makers to
offer a price that competes with desalination. Any price that would
compete would be below the cost.
[...]

Oh dear, we're back to the land of fancy and contradiction.

I realise you must try to have it both ways or neither way to
avoid the horns of the dilemma.

But either you accept there are the std links between price, demand
and supply in which case price tells you nothing about people's
beliefs and what gives them fuzzy fellings; or you assume people do
what they will, there is no causal link, and you can say even less
about what prices mean.

--
R Kym Horsell

If your ideas are any good you'll have to ram them down people's throats.
-- Howard Aiken

In sci.skeptic Sylvia Else wrote:
[...]
But if they're simply trying to obtain their water for the lowest
possible expenditure, which is the situation we're discussing, then the
value is the lowest price they can get, and desalinators will win over
rainwater tanks because it is not possible for rainwater tank makers to
offer a price that competes with desalination. Any price that would
compete would be below the cost.
[...]

Oh dear, we're back to the land of fancy and contradiction.

I realise you must try to have it both ways or neither way to
avoid the horns of the dilemma.

But either you accept there are the std links between price, demand
and supply in which case price tells you nothing about people's
beliefs and what gives them fuzzy fellings; or you assume people do
what they will, there is no causal link, and you can say even less
about what prices mean.

You are again putting yourself in the position of the automobile
naysayers c1900 saying "horses are better than cars; people will never
buy cars because they are too expensive compared with horses".

--
R Kym Horsell

If your ideas are any good you'll have to ram them down people's throats.
-- Howard Aiken

In sci.skeptic Sylvia Else wrote:
[...]
A person may buy a rainwater tank because it makes them feel green (and
they like that feeling). If they do that, then that feeling is what
makes the value higher for them.
[...]

Turning to some facts we have surveys of why and how many Australians
have installed tanks upto approx 2008. According to some "no one" will
opt for a more expensive option, when there is cheap, desalinated water
around. The real world seems to have disobeyed the theory, again.

From the Aus Bur of Stats:

In 2007 (latest data available) 19.3% (1.5 mn) households have a
rainwater tank. Another 3.2% have a tank on order. This compares with
17.2% of hh in 2004 and 15.2% in 1994.

SA had the highest proportion 45.5% of hh; Qld is the 2nd highest at
22.1%.

Saving water was the main reason to install a tank (41.7%); 27.3%
installed a tank because they had no access to mains water; 19.5% were
concerned at the quality of mains water; 12% installed a tank to
reduce the cost of water; 6.3% wanted specifically to use the water
for outside use (e.g. during the past few years water restrictions
prevented or at least restricted using mains water for lawns, gardens
or car washing).

34% of hh 2007 reported they would not install a watertank because of cost.

--
R Kym Horsell

If your ideas are any good you'll have to ram them down people's throats.
-- Howard Aiken

On 12/11/2010 12:58, Sylvia Else wrote:
On 12/11/2010 11:43 PM, Martin Brown wrote:
On 12/11/2010 12:14, Sylvia Else wrote:

The market determines where the price lies between cost and value, but
the price still has to lie between them. If it doesn't then either
sellers are losing money on the sales, or purchasers are paying more
than they believe the thing is worth. Neither scenario is going to occur
in the normal way of things. People sometimes make mistakes, and
sometimes things are sold below cost or bought above value for ulterior
motives, but in the main stream the price cannot lie outside the limits
of cost and value, because people are not that stupid.

They are *exactly* that stupid. I take it that you have never heard of
any of the "Designer" Brandname products that are priced way beyond
their intrinsic value or cost to manufacture. People will pay insane
amounts of money for a trendy "Name" on their clothes, perfume etc.

What you're saying is that people have different notions from you as to
value, and I'm inclined to agree that the values people attach to some
products beggars belief. But people people don't pay above the value
they perceive.

Agreed. They are tricked into perceiving a higher value by clever brand
management, coupled with sophsticated advertising and slick marketing.

The most recent insanely overpriced "green" thing I saw was a hedgehog
home at £50. It must have cost all of £1 in materials and labour to
make. Some people have "sucker" stamped prominently on their foreheads.

A person may buy a rainwater tank because it makes them feel green (and
they like that feeling). If they do that, then that feeling is what
makes the value higher for them.

At least in the UK small ones are cheap and the rainwater is much better
for lime hating plants like my orchids. I also have two plastic dustbins
I scavenged for nothing. When I lived in Belgium the house had built in
rainwater collection from the roof to bulk underground storage 3x3x2m
and also for the greenhouse with a 2x2m open sump 1m deep. Basic
reinforced concrete construction with an additive to make it waterproof.
Yes it costs money to dig a hole and line it with concrete for water
storage but compared to building a desalination plant it is peanuts.

Using potable water for watering plants is utter madness. I thought
Australia was actually ahead of the game in using recycled grey water
irrigation in its gardens - at least in the parts I have visited.

But if they're simply trying to obtain their water for the lowest
possible expenditure, which is the situation we're discussing, then the
value is the lowest price they can get, and desalinators will win over
rainwater tanks because it is not possible for rainwater tank makers to
offer a price that competes with desalination. Any price that would
compete would be below the cost.

You can get rainwater tanks in the UK for about 17p/L of storage if you
shop around for several hundred litres of capacity.

Desalination is a relatively expensive energy intensive process unless
you can harness the sun to do it for nothing.
How much does your desalinated water cost?

Regards,
Martin Brown

On 13/11/2010 12:11 AM, wrote:
In sci.skeptic Sylvia wrote:
[...]
But if they're simply trying to obtain their water for the lowest
possible expenditure, which is the situation we're discussing, then the
value is the lowest price they can get, and desalinators will win over
rainwater tanks because it is not possible for rainwater tank makers to
offer a price that competes with desalination. Any price that would
compete would be below the cost.
[...]

Oh dear, we're back to the land of fancy and contradiction.

I realise you must try to have it both ways or neither way to
avoid the horns of the dilemma.

But either you accept there are the std links between price, demand
and supply in which case price tells you nothing about people's
beliefs and what gives them fuzzy fellings; or you assume people do
what they will, there is no causal link, and you can say even less
about what prices mean.

No, it's you who seem unable to understand that although price is
determined by demand and supply, whether a price exists at all depends
on whether it is possible to meet the constraint that the price has to
lie between cost and value.

I'm maintaining that for the vast majority of consumers, who value water
purely based on the minimum amount they have to pay for it, from
whatever source, a price for water from water tanks does not exist.


You are again putting yourself in the position of the automobile
naysayers c1900 saying "horses are better than cars; people will never
buy cars because they are too expensive compared with horses".


No, I'm simply saying that it is not possible for water tank
manufacturers to offer water tanks at a price that the vast majority of
consumers will be willing to pay. The market forces of supply and demand
cannot operate on a non-existent price.

Your horses versus cars example is hardly relevant, because they are not
equivalent modes of transport. Most users don't care where their water
comes from, as long as it's always there in the tap at an acceptable purity.

Sylvia.

In sci.skeptic Martin Brown wrote:
[...]
Desalination is a relatively expensive energy intensive process unless
you can harness the sun to do it for nothing.
How much does your desalinated water cost?

The estimate for running cost is between .50 and .80 dollars per kilolitre.
What that will turn into before it hits households is another matter.

My water bill (I still get a few kL pa from the mains because it's
mandatory) is 1.25 to 1.53 dollars per kL. And that's for "cheap" water
from the catchments. So what the market asks is maybe not a small
multiple of the running cost.

My bill, BTW, is 93% "handling charges". The actual water and drainage
is only 7% of the annual cost. Before the water was privatised I paid
nothing for mains water. My usage was so low it cost the govt more
to read the meter and send a bill out every quarter than it was worth.
But water companies are apparenrtly a bit like banks.

In Melbourne we have yet to see a desal plant finished and in production.
The market is bound to change it's "mind" between now and then.

--
R Kym Horsell

If your ideas are any good you'll have to ram them down people's throats.
-- Howard Aiken

On 13/11/2010 12:43 AM, wrote:
In sci.skeptic Sylvia wrote:
[...]
A person may buy a rainwater tank because it makes them feel green (and
they like that feeling). If they do that, then that feeling is what
makes the value higher for them.
[...]

Turning to some facts we have surveys of why and how many Australians
have installed tanks upto approx 2008. According to some "no one" will
opt for a more expensive option, when there is cheap, desalinated water
around.

Who said that?

The real world seems to have disobeyed the theory, again.

From the Aus Bur of Stats:

In 2007 (latest data available) 19.3% (1.5 mn) households have a
rainwater tank. Another 3.2% have a tank on order. This compares with
17.2% of hh in 2004 and 15.2% in 1994.

SA had the highest proportion 45.5% of hh; Qld is the 2nd highest at
22.1%.

Saving water was the main reason to install a tank (41.7%); 27.3%
installed a tank because they had no access to mains water; 19.5% were
concerned at the quality of mains water; 12% installed a tank to
reduce the cost of water; 6.3% wanted specifically to use the water
for outside use (e.g. during the past few years water restrictions
prevented or at least restricted using mains water for lawns, gardens
or car washing).

34% of hh 2007 reported they would not install a watertank because of cost.


If reticulated water is unavailable, then you have no choice, and the
cheaper option is not available. A few install water tanks to make them
feel green. Yes, some install them to avoid water restriction, which
again relates to a cheaper option not being available (for doing with
water what the restrictions disallow - I even considered it myself). A
lot of people don't know how to calculate the cost of the water from a
water tank, and think that it's cheap when it's not.

But none of those considerations enter into a discussion about whether
water tanks are more expensive than other ways of supplying water.

Sylvia.

In sci.skeptic Sylvia Else wrote:
[...]
I'm maintaining that for the vast majority of consumers, who value water
purely based on the minimum amount they have to pay for it, from
whatever source, a price for water from water tanks does not exist.
[...]

Then, again, your beliefs are at variance with the actual case.

--
R Kym Horsell

If your ideas are any good you'll have to ram them down people's throats.
-- Howard Aiken