Economics 101

Why Economics Helps Us Navigate a Fallen World

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The college admissions scandal that rocked the U.S. this past week was a blatant reminder that we live in a fallen world where fallen people deal with issues of scarcity. What is scarcity and how does it impact our daily lives?

Scarcity is a fancy economic term to help explain that our fallen world has limits. Look at the biblical story through the lens of the four-chapter gospel—Creation, Fall, Redemption, Restoration. In the Garden, there was abundance, but since the fall of mankind, there is scarcity. No one has unlimited time, energy, resources, or relationships. As Christians, we must consider the implications of the Fall and how to be faithful in our journey toward Restoration.

Fallenness is a fact of our daily existence—something we constantly face. The good news is that economics provides a tool to help us navigate our fallen world. Scarcity is just one economic concept for our toolbox.

As we saw in this scandal, even the wealthiest person you can think of faces scarcity, both in terms of time and opportunity and the fragility of our own lives. The wealthy families involved in the scandal faced a scarcity of opportunity at the colleges they wanted their children to attend. They used their wealth to cheat the system and buy their way in.

Or, think of Steve Jobs, who was also very rich in earthly terms. He was simply 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, and we have a choice in how we will respond. In the admissions scandal, these individuals figured the risk of getting caught was smaller than the benefit of getting their kids admitted. They were wrong and are now suffering the consequences. As Christians, God calls us to make decisions that please him, and he provides his word and the Holy Spirit to guide us.

Scarcity in Everyday Decisions

Outside of the headlines, let’s look at how scarcity impacts our daily lives. For example, 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. So, 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 whom to marry, what profession to pursue, or what city to live in? Many of us probably don’t realize that we are daily 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.

Everyone has 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.”

Why Economics Is Key to Good Stewardship

I believe 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 exiled people 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.

Editor’s note: Scarcity is just one of many fundamental principles of economics that help us live out our calling as Christians. Check out the following blogs to learn about:

Read more about why economics is key to good stewardship in Be Fruitful and Multiply: Why Economics Is Essential for Making God-Pleasing Decisions.

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