When asked the question, “What is economics?” very few people are able to pinpoint exactly what they think it is, but they know it has something to do with money. Often they respond by pointing to examples of economics in action, like the stock market and global trade. Sometimes they will reference business and Wall Street. The most informed may even mention systems of economics like capitalism or Communism, or even economists like Milton Friedman or Jeffrey Sachs.
While economics does indeed have a lot to do with money, these associations are far too narrow. Economics is most simply and completely understood as the study of choice. The context within which these choices occurs is known as the economy. Economists attempt to understand the world by looking at incentives. What caused you to act the way you did? What might be changed to reach a different outcome? What’s the overall effect of the billions of individual choices made each day?
Understanding economics as the study of choice clarifies the reason values are a necessary part of any meaningful economic conversation. Our values influence the incentives that drive our behavior. Consider what type of person you hope to marry (a reflection of your values) and the ways the incentive of marrying a good person impacts the person you strive to be.
Values also influence our beliefs about what to incentivize through our laws. As a society, we agree that life has enormous value, so we enact laws that provide a disincentive to murder (life in prison or, in some places, the death penalty).
Common Sense Concept exists to spur you to think about economics as a dynamic system involving your most deeply held values.
More on the Economy…
It’s Easier to Be Brilliant Than Right by Alex Pollock
There is a danger with intellectual brightness. It is to overemphasize and develop a bias for cleverness, quickness, facility with data, and the ability to persuade. Read the full article
Why Does Government Grow? by Andrew G. Biggs
If Americans prefer smaller government, why does it continue to grow? Read the full article
Fight the Coffee Purchase Guilt by Chris Horst
Have you ever been a part of a church service or conversation when someone said something like, “You selfishly spend $20/month on coffee purchases — imagine what good that money could do if you gave it to a non-profit!” I’ve heard it many times and am sure I have even said it more than once. There is some truth to that comment, and I am not writing this post to justify excessive consumerism, but I am increasingly convinced that is a misleading admonition. Read the full article
Jim Wallis and Glenn Beck Discuss Social Justice (April Fools Version)
At a remote outpost on an obscure planet, Jim Wallis and Glenn Beck meet to discuss the real meaning of “social justice” away from the prying eyes of the media circus Watch the video
Are Too Many People Going to College? by Charles Murray
America’s university system is creating a class-riven nation. There has to be a better way. Read the full article
The Next Culture War by David Brooks
Centuries ago, historians came up with a classic theory to explain the rise and decline of nations. The theory was that great nations start out tough-minded and energetic. Toughness and energy lead to wealth and power. Wealth and power lead to affluence and luxury. Affluence and luxury lead to decadence, corruption and decline. Read the full article