The Diamond-Water Paradox : Planet Money The Diamond-Water Paradox poses the question: If we need water to survive and we don't need diamonds, why are diamonds expensive and water cheap?
NPR logo The Diamond-Water Paradox

The Diamond-Water Paradox

Adam Smith, the father of economics, had a problem. He believed in the wisdom of markets--that the free market would always settle on the best price for something. That price would be an expression of how valuable that item was. The problem: diamonds are more expensive than water and water is more valuable to us than diamonds.

We talked to Linda Yueh about the paradox and Smith.

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