What Is The Water Diamond Paradox?

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Shezan Shaikh Profile
Shezan Shaikh answered
The diamond paradox is known as the paradox of value and is apparently the contradiction or a paradox within the classical economics…according to this, although the water is more useful for the life of any given living thing than diamonds. In the market Diamonds command a higher price than that of water. However once Adam Smith had famously propounded this paradox as the wealth of the nations.

According to the theoretical explanation passed by Adam Smith: -" The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it"

He also explains that: - The one may be called 'value in use;' the other, 'value in exchange.' The things which have the greatest value in use have frequently little or no value in exchange; and on the contrary, those which have the greatest value in exchange have frequently little or no value in use".
John Herald Doe Profile
John Herald Doe answered
The paradox of value (also known as the diamond-water paradox) is the apparent contradiction, that although water is on the whole more useful, in terms of survival, than diamonds, diamonds command a higher price in the market.

Why are diamonds valued more than water? Water, not diamonds, is necessary for life. So shouldn't’t it be more valuable? Classical economists puzzled over this question and named it the value paradox.


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