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Standard values are used to handle the challenging job of quantifying value in a meaningful way.
The TVM system uses the concept of 'standard value' to provide a basis for quantifying value and simplify the accounting in much the same way as standard costs are used to simplify cost accounting in conventional accountancy.
The standard value serves as a fixed benchmark and changes to these benchmarks becomes a way for changes and differences to become part of a record that can be used for analysis.
In the TVM framework all values have a quantity relationship with all the other values.
If value element A is quantified at 1,000
Then something with a perceived value less than element A will be quantified at less than 1,000
Conversely, something with a perceived value better than element A will be quantified at more than 1,000
NOTE FOR FOLLOW UP:
This is a process that can be automated by using modern IT and making a mobile app to collect data.
Standard Value. Standard values are used in TVM in much the same way that standard costs are used ... that is they make it possible to quantify critical information without having a lot of detailed data and complex computations.
Standard values, however, are different from costs in that they vary depending on the perspective of an individual, the perspective of the community, and the value systems of different people and communities. Standard values reflect a variety of different value systems influence by culture and tradition rather than being a result of purely technical calculations. The following table is an example of different standard values that might arise because of the different situations in, for example, the United States and a typical poor community in a developing country.
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Description
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A US perspective
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A very poor community
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A lost days work
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$200
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$2
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Death of a child less than 1 year old
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$100,000
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$50
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Death of a person aged 75
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0
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0
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Extending life of 75 year old person by one year
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$100,000
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0
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Having medication to save life of a child
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$100,000
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$50
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Unlimited toys for Christmas
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$50,000
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$20
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Being safe at home
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$50,000
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$100
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Caring for an aging parent
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-$50,000
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$1,000
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Caring for an orphan
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$10,000
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$100
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Standard values provide insights that are helpful. They start to show how different aspects of society and of life relate to each other. Different communities will value different things in different ways.
Values are central to TVM/MDIA ... standard values are a way to include value in the analysis of progress and performance. There is little agreement about what values are priority and what are of lesser importance, but by putting a numerical value onto value it becomes possible to move towards more agreement and understanding.
For value to be central to the TVM metrics of performance and progress, standard values have to be developed for a wide variety of indicators.
Though it may not be possible to get agreement quickly ... if ever ... it will be possible to build a database that shows standard value profiles for many communities, and it will then be possible to compare profiles between different places. These profiles of value make it possible to prioritize resource use in a more appropriate way for the community ... and for dialog about values to have a solid starting point.
A process to create standard values
TVM starts with an estimate of this value ... quite arbitrary, though maybe based somewhat on common sense and an idea of what society thinks! For many items what people are prepared to pay is a useful indicator of what value might be ... but only an indicator. An iterative process of disagreement and revision and improvement ... comparison with other standard values ... and a profile of standard values emerges.
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