Economics 101

Can Economics Help You Make Better Stewardship Decisions?

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Many Christians disregard economics in making decisions because economics seems remote and aggregated—in other words, personally irrelevant. Much of the economics profession has moved toward more aggregation and more sophisticated mathematics over the past century. Some, but not all of that, is a good thing because ultimately, economics starts with people like you and me.

A new working definition of economics was eloquently explained by economist Ludwig von Mises in 1940 in his seminal work, Human Action. Mises defined economics as the science of purposeful human action. In our context, economics is the science of making God-pleasing decisions.

With that definition in mind, how can economics help us be better stewards of all God has entrusted to us? Let’s start with understanding the following economic realities and then see how we can incorporate them into our daily decision-making.

Scarcity

We live in a world of scarcity and we always have, even before the Fall, because we are finite. We have never had infinite knowledge or power. Sin exacerbated the conditions of scarcity by making everything more difficult. Human discovery, entrepreneurship, and learning are all more difficult than they were before sin. We still have to choose, but those choices are less transparent and fraught with our own sinful desires. When we choose, we face trade-offs that impose costs, even in the daily decisions like whether to exercise, make dinner, or read a book. The cost is always relative for each person and for each decision because we value things differently.

Subjective Value

The idea that we value things differently comes from our uniqueness. We subjectively value things based on our preferences and needs because we are all designed by God with unique gifts and desires. We have different desires that work their way into what costs we are willing to bear to acquire certain things. Our varied subjective values result in many options that exist to serve a wide range of different tastes and preferences. The world is better when there are more options at a lower cost. Having more options satisfies more preferences, lowers costs, and increases quality. As a result, we all profit more and have leftover resources and time to devote to other pursuits.

Self-Interest

If each of us assigns values differently based on our preferences, then what we view to be in our self-interest is inextricably linked to what we prefer or value. The idea of self-interest can make believers recoil as it is often confused with selfishness. When we dismiss the notion that our lives are all about God and we put ourselves first, our subjective value can become selfish, more focused on what we want, not what God wants. Consequently, things become harder for us. We again become victims of our own sin, and the things we think are good for us actually harm us.

Self-interest then involves sacrifice or surrender of my will to God’s will. It is in my own interest to choose Christ and pursue him in every endeavor. I must have a motivation or reason to do this, so incentives matter.

Proper Incentives

For all of this to work well, we need proper incentives. For the believer, these incentives are pleasing God. God is the originator of incentives. When we seek to please God in all that we do, when we ask him to be present with us in every choice, we can better steward our scarce resources for his glory, and he blesses our efforts. When we act out against God’s will and his good design for us, we face frustration; we are pursuing a way the world was not meant to be.

Receiving the richness of God’s pleasure and blessing based on our obedient stewardship is the ultimate incentive, born out of our response to God’s love and grace. Humans will not act without a motive; they must be propelled by their purposes to act. Then when presented with choices we can reason through what is better, although the process of this remains difficult. As the parable of the talents demonstrates, the pleasure of the master is the ultimate incentive.

Interdependence

The last fundamental reality is our interdependence. We are made in the image of God but are limited and finite in ways that he is not. We cannot do most things that we need to survive, and this was God’s intention. God designed his people to be in community and to rely on each other’s gifts and talents. We are finite people who have some gifts, so how is it that we have so many options in our modern world? It is because countries like the United States have implemented systems that allow humans to depend on and serve each other.

Think of all the things you did after you woke up this morning and before you left your house. You may use your smartphone as your alarm clock. You shower using shampoo, conditioner, and soap. You brush your teeth with a toothbrush and toothpaste. You put on clothes that you did not sew. You brew coffee and pour it in a mug. You rinse your empty coffee cup under your faucet of running water and place the mug in the sink. You check your email briefly on your laptop before getting in a car and heading out.

How much of these materials did you make yourself? Most likely, none of them. When we use our gifts, we can use our time to focus on the things we are good at doing.

Our diversity brings us together through trade, allowing us to be interdependent. I go to work and trade my time for income. I can use my income to purchase hot dogs, laptops, and toothpaste. This system of trade is essential for flourishing, and it is only made possible when we can depend on each other. Trading based upon on subjective value allows us to be free to do what God created us to do. We don’t have to figure it all out because we were not made to do everything. Only God can do that.

Trade allows us to profit on our time while lowering all of our costs. As we discussed, when we make a choice, we always bear a cost. The cost is the forgone opportunity in that moment in time, known as the opportunity cost. Trade brings strangers together to serve each other. For this to work well, we need a society that embraces the biblical principles of peaceful cooperation.

Editor’s note: Read further on this topic in Be Fruitful and Multiply: How Economics Is Necessary for Making God-Pleasing Decisions.

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