Economics 101

An Overlooked Tool for Making Decisions in Our Fallen World

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As I follow the news lately, I’m constantly reminded that things in this world are not as they should be. That’s why I’m grateful economics is a tool we can use to navigate our fallen world.

You might balk at this. At the very least, you’ve probably never thought of economics this way. But, when it comes down to it, economics is about making wise decisions, and how else do we get around this crazy world of ours?

IFWE has talked a lot about the four-chapter gospel and the implications for how we think about integrating faith, work and economics. This new paradigm requires us to consider the implications of the Fall and our journey toward Restoration. Brokenness is something we constantly face. So how does economics help us navigate all this?

Consider scarcity. The fallen world is one where scarcity abounds. We don’t have unlimited time, energy, resources, or relationships. Even the wealthiest person you can think of faces scarcity, both in terms of time and the fragility of our own lives. Think of Steve Jobs, who was very rich in earthly terms.  He was limited by the number of hours in each day and his own lifespan.

This scarcity we face is ongoing and will not end as long as we live on this earth. It imposes constraints on our behavior. I may have many and varied interests, but I am unable to pursue them all concurrently. If I choose to pursue a legal profession, it is unlikely that I can simultaneously pursue a career as a doctor. Life in a fallen world requires that we make choices. Each choice imposes a cost, even if the cost is only in terms of our time.

How do we choose who to marry, what profession to pursue, what city to live in? Many of us probably don’t realize that we are making cost-benefit decisions using the tool of economics (in a broad sense, not just financial decisions) to help us navigate a world full of knowledge that we can’t grasp all at once.

Have you ever heard the saying “Hindsight is 20/20”?  It means that if I knew when I had to make a choice what I know now, I could have made a better choice. In a fallen world, choice is constrained by risk. Risk exists because we don’t have perfect information – we’re not omniscient.

Put simply, economics is the study of individual choice under scarcity and the process of adjustment.  Both life and the discipline of economics are dynamic. The conditions and constraints we face are constantly changing.  Economics helps us understand how individuals make choices and adjust to new constraints.

As James Gwartney says in Common Sense Economics,

That is the task of economics – to explain the forces that affect human decision-making.

God has given us economics to help us find our way through a fallen world, where information is almost endless and not all of it is ever known to one individual.

Even though we live in a fallen world, God calls us to work and to prosper – to wisely steward what he has given us.  We see this in the parable of the talents, and in God’s call to his people in exile in Babylon:

Seek the peace and prosperity of the city to which I have carried you into exile. Pray to the LORD for it, because if it prospers, you too will prosper. (Jer. 29:7)

Economics provides a framework for understanding how to navigate a fallen world, glorify God through our vocation, and provide for the common good of society.

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