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Comment by kevinpet | Hacker News Reader

No, taking your reasoning as correct, Google would have had a cost of 1.8M workers in 1998 without technology. The fact that this service didn't take off before the technology could support it suggests that it is actually worth less than that.

Just because I paid $4000 for a hand carved peruvian hardwood iphone case does not mean that its actually worth that.

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"But it can only give you an upper limit on the value of the innovation, since if it paid to do it the labor intensive way, that would have been happening. It needs improvement."

what lurker14 said. Your first paragraph is correct, your second one is not.

Incorrect example. Your $4000 hand-carved peruvian phone was worth that, since you bought it.

Only if you take an extremely tautalogical definition of "worth" of limited usefulness. If you strengthen it even a little bit further, towards a definition that takes into account a degree of repeatability, then a single transaction is not sufficient to establish worth.

That also accords better with general English usage, where what something is worth and what a particular person paid are not considered generally equivalent. There exist phenomena such as "overpaying" and "getting a great deal", where payment in a particular instance diverges (in either direction) from this more robust notion of "worth". Indeed, if that were not the case, arbitrage would be impossible.

You are assuming that people are rational. Yes, a rational person purchasing an item is evidence that the item is worth the price that was paid for it. No, a person purchasing an item is not evidence that the item is worth the price that was paid for it.

It was worth $4000 TO THAT ONE PERSON. But that's hardly a robust definition of the item's worth or value across an interesting population.

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