Overvaluation: meaning, definitions and examples

This term is often used in finance and economics when the price or worth of something is deemed higher than its actual value.

• The overvaluation of tech stocks in the early 2000s led to the dot-com bubble.
• Investors are worried about the overvaluation of the housing market.

In economics, this term refers to the general increase in prices and fall in the purchasing value of money. While it can be confused with overvaluation, it is not an overestimation of value but rather an economic condition.

• The government is taking measures to control the inflation rate.
• Rising inflation has affected the cost of living for many families.

This word is more broadly applicable than 'overvaluation' and can refer to any situation where something or someone's ability, quality, or size is judged to be greater than it actually is.

• There was an overestimation of how many people would attend the event.
• The team’s overestimation of their opponent’s skills led to a poor strategy.

This word is commonly used in everyday language to describe situations where someone makes something seem larger, more important, or more extreme than it actually is.

• Saying that he could run a mile in four minutes was certainly an exaggeration.
• The media's exaggeration of the facts caused unnecessary panic.