Economics has its creepy moments

The new economy

Posted: Friday, May 26, 2000

Writing a biweekly newspaper column may be a way to meet people, but it's not always a way to make friends - especially when the topic is the dismal science of economics. This struck home last week when I read the Word of Mouth comment which said, ``I think Bill Brown's economic theories are creepy.'' This was, as far as I am aware, the first time my economics has been called creepy. Colleagues who disagree with my work typically say it is ``illogical'' or sometimes ``ill-conceived''; perhaps this is what that anonymous Word of Mouth caller would have said had she or he had a larger vocabulary. Perhaps.

But economics does have its creepy elements. Remember when Baby Jessica was trapped in that abandoned well in Texas a few years ago? Millions of people around the world clung to their television sets to follow the ordeal, and later watched a TV movie that chronicled the affair. People cheered and cried with joy when Baby Jessica was rescued, and I know at least one economist who was among those who cheered. But from a strictly economic point of view, it was irrational to spend the hundreds of thousands of dollars to rescue Baby Jessica because the same amount of money would have saved the lives of many more children had it been spent on neonatal care. Or think about those gray whales that were trapped in the Arctic ice a few years back. Both the United States and Russia sent in rescue teams to break the ice and save the whales. Millions of dollars were spent. Economic logic would say that this money could have been spent in much better ways to save more whales. Yet the public seemed to want to save those particular whales.

Economists are trained to think logically, compare costs and benefits, and divorce themselves from noneconomic issues. Sometimes this makes economists seem creepy, but not all of the time. Economic logic helps economists to ignore their prejudices and see, for example, that there are social benefits associated with treating homosexual couples the same way that heterosexual couples are treated. Economic logic allows economists to understand that the current plan to privatize the state's telecommunications work makes sense only if it reduces costs - and that ``cost reduction'' is too often a euphemism for employee cutbacks.

Just being able to understand the consequences of economic events or policy changes does not mean that economists always advocate them. Economic reasoning can be used to show the tradeoffs - jobs for money in the case of privatization - but it cannot be used to determine which choice to make. That is a political decision; economics provides only the information. My own view is that the dollar savings may not be worth the job loss, but that is a personal view not scientific economics.

Economics and economic reasoning is everywhere, something the public is finally beginning to realize. More college students now take principles of economics than any other course in the curriculum. Business majors must take economics to understand the importance of profits and how markets work. Liberal arts majors take economics to understand how it influences the political system. Many high schools - including those in Anchorage - now require that all graduating seniors take at least one course in economics. High school graduates who have taken economics have a lower probability of bankruptcy later in life. The demand for economics in continuing education programs is increasing as well, at least partially because of the Internet and explosive growth in online stock trading.

But I do wonder whether we can take economics too far. The push to install the American brand of capitalist economics in the former Soviet Union is a main reason why the Russian economy is collapsing. In hindsight, it would have been much better to implement an economic system that recognized the history and culture of the Russian people. And there are problems with economics at home as well. There is increasing evidence that students who have completed just one college course in economics are more selfish than students who have never taken economics. Apparently once students buy into the profit motive and market capitalism, they begin to think that everyone really is responsible for their own fate. That may be true. But I still would have rescued Baby Jessica.

Bill Brown teaches economics at the University of Alaska Southeast. He can be reached at edu

Trending this week:


© 2018. All Rights Reserved.  | Contact Us