The Science of Choice

For a long while now I have been interested in the science of economics. Mainly because I see how in effects our everyday life. Think about it, everyday we make choices, should I get ice cream? Should I goto Wendy's tonight? If I do, should I order off of the 99 cent value menu or go all out and get a value meal? These are important questions. The fact is, our resources are limited, and we need to make choices on how to maximize our benefit from them, thus economics.

Now lately I have been perusing through a book by a feller of the name Tom Rose. The title is Economics: Principles and Policy, from a Christian Perspective. So far it seems to be very interesting and sound writing, but we shall see. This next set of BLOG entries will be my attempt at explaining Roses view of economics.

It seems to be obvious that man is rational, that is, we can choose. So to start out, one of the first things man chooses is the value of things. What is worth more, a diamond or a glass of water? Well, the answer depends on who you are talking to. If you pulled Joe Blow off the street and offered him a glass of water or a diamond, there is probably no question as to what he would choose. But if you asked the same question to a man in the middle of the desert who has not seen water for five days, you would probably get a different response. The point is, value is a relative term. It is not the object (the diamond or the water) that determines the value, but the man receiving the object. Objects are only valued at what man values them.

This being said, the question is how should we value them? That is where economics comes in. Now not to be confused, when I mention objects, I really mean anything that can be purchased, that is, time, processes, ideas as well as material objects. But again how does one value them? Well the economist, or social scientist, uses the all to familiar scientific method. They pretty much make observations then make the best decision based on previous instances.

This is all fine and dandy, but we are talking about economics from a Christian Prospective. Hence, just because a specific means to an end is the most efficient, it does not imply it is the best. This is want Rose calls Positive and Normative economics. Positive economics is the pure aspect of the science. It asks, “What is the most efficient means of achieving ends that have already been determined.” Positive economics pays no attention to the moral or ethical questions. Whereas normative economics is concerned with the ultimate end; it is concerned also with moral and ethical questions.

Here is an example that Rose uses. A dentist working on a patient whose tooth is hurting. The patient makes the suggestion that the tooth be extracted, the dentist replied, “The X-ray shows that the tooth is savable. We can fill it or cap it, as you wish. But, I won't extract a tooth that is basically sound.”

Now in this example, the positive economics is the choice between filling or capping the tooth. But the Normative side objected to a third option, the pulling of the tooth. Other examples range from a doctor refusing to give an abortion, or an accountant refusing to work for a criminal institution like the mafia or Wal-mart.

In short, we need to remember that as we place value on objects, we ought to keep before us biblical principles and morals. When dealing with the science of choice, it is very easy to fall in to the trap of modern professionalism. The idea that our personal philosophies and religions are not to effect our professional life. This idea is not to be welcomed in any part of life, especially economics.

So how are objects valued? By making observations and acting accordingly based on the observations. Always keeping in mind the moral and ethical implications. Of course this is a very broad answer, but more is to be said next time.