Economics 101

Watch the Story of How Complete Strangers Saved a Baby’s Life in IFWE’s New Video, “Why Economics Matters”

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“When I went into early labor and was rushed to the hospital, we didn’t know what was going to happen,” recalls Anne Bradley, IFWE’s vice president of economic initiatives. She’s playing with her three-year-old daughter, Bailey, on a playground full of kids and parents and bright fall foliage, and recounting Bailey’s traumatic, premature birth.

“There was nothing I could do. I had to rely on countless people I did not know and trust them to care for me. What kind of society makes this even possible? A free society where people are able to use their gifts to serve others. In another place, in another time we may have been dead. But that’s not our story because free markets save lives.”

Anne is telling her story for IFWE’s new video, “Why Economics Matters“. In the video, Anne explains how economics is a part of everything we do, especially making God-honoring decisions that bring about human flourishing for more people. Anne and Bailey’s experience illustrates why it’s important to build a society on these kinds of decisions.

“Everyone has a Bailey story,” Anne tells me later for this interview about the new video. Over the course of a half-hour, she candidly shared about how hard it was for her to share her Bailey story on film, and how to replicate for others the life-saving conditions we live in today. It begins by recognizing we’re all economists at heart. After all, Anne argues, economics is an everyday affair.

The obvious question first: Why does economics matter? You’re an economist, so to you it matters a lot. But to the rest of us…

It’s funny, because when people hear I’m an economist I think they sometimes want to run away because they think that doesn’t apply to them. It very much does.

I think when people hear the word economics they think about trade deficits and GDP and interest rates, and economics certainly is about those things, but at its core, it’s actually not about those things. It’s first about how people make decisions when there are a lot of things they could choose. Economists call that notion scarcity. In a world where you can’t satisfy all your desires, you have to choose. Time is actually your most important constraint. You have a limited number of hours in a day, and you have a limited number of years on the planet. As believers, we know we are to use those with purpose and intention. Thinking like an economist helps us get there.

Why don’t people think of economics this way?

That they think of it in those macro concepts?

Yeah. They probably rarely ever think about it in terms of the choices they’re making everyday.

If you’ve taken a class in college, economics has become more about the use of mathematics and aggregation. We want to measure country performance and things like that. It became what the discipline talked about more.

It’s what you hear about on the news, like what the fed is going to do with interest rates. That’s not unimportant. But how do you even have a basis for those big ideas? What should GDP look like? How do I think about an interest rate? You have to understand the foundations for those aggregations. Economists call these micro-foundations.

At the micro-level, it’s you and me. When we wake up in the morning, we know we need to eat breakfast. There are a lot of things we can eat. We have a limited budget and a limited amount of time, so we start rationing. We say “I’m going to have oatmeal,” or “I’m going to have grapefruit,” or “I’m going to make it myself to save money,” or “I’m going to go out to eat because I’m in a hurry.” It’s those types of things that we’re deciding every day.

Economics helps us think about what we’re giving up. It forces us to think about costs. It also forces us to think about the long run, not just today. That’s really important for being prudent with our time.

How can we train or form ourselves to think about these micro-foundations? How do we shape ourselves to be conscious of this economic way of thinking?

I like the way you asked that, because I think we actually all do it. I think we’re daily all economists.

We’re just not conscious of it.

We’re just not conscious of it. We’re not saying “Hmm, what is the cost-benefit analysis of me making coffee at home or going through the drive-thru at Starbucks?” We aren’t overtly thinking that’s an economic choice, but it absolutely is. It requires us to weigh different things.

It is about being conscious. If you’re always choosing Starbucks because it seems easier, but you’re going into debt because you’re spending too much money on coffee, you’re not thinking about the long run. You’re just thinking about today.

What’s the first step someone could take to begin thinking about the long-term?

I think we should expect we’re going to live a long time. That’s one thing. You’re going to pay for the choices you make today. You have to have a long-term perspective. As Christians, that’s incumbent upon us. We’re not just to think about today, but about what we’re for and what our choices mean for the future.

We need to think about incentives. What are the motivations people have for doing things? What would discourage certain behaviors and encourage others? That’s how economists think about trying to encourage or discourage certain activities.

It helps to understand some very basic principles about who we are as human beings created in God’s image. We’re people who are always in motion, that’s how I like to put it. We’re always happening; we’re always making choices. Eating breakfast, brushing your teeth, doing these things – you do them for a purpose.

So it helps if we start looking at human behavior as purposeful behavior, which is an is insight of economics – human behavior isn’t random, it’s actually to serve a purpose. Now we’re sinners. We’re uninformed, and we don’t always make the right choices, whether by sins of omission or commission. But by embracing this long-term thinking, we can start to be better about the choices we make.

How do you see yourself living out the economic way of thinking in your own life?

As somebody who is raising children, this comes to my mind a lot. How would I try to encourage certain behaviors among my children and discourage others? As an economist, I understand incentives matter. I have to use motivations to encourage good behavior.

If I tell my son that there are consequences if he doesn’t listen to me, and then never enforce the consequences, basically what I’m telling him is very different than what is coming out of my mouth. I’m telling him he’s going to be punished, but then I never punish him. He doesn’t have any incentive to follow the rules because the punishment is never levied.

That is very much an economic way of thinking about encouraging good behavior. I have to have a credible commitment with my children. And if we don’t have credible commitments with authority, we’re not going to do what we’re supposed to do.

Speaking of your kids, in the video you share a personal reflection on why economic freedom and the economic way of thinking matter. You argue that the medical care and equipment that saved your daughter Bailey’s life were made possible by the conditions of economic freedom. What was it like to tell that story as you were filming this video? Was it hard?

It was very hard. We had been writing a script collaboratively with the producers of the video, and I memorized what I was going to say. When we got to that story, I couldn’t do it. Part of me was very emotional about that story. It’s hard to tell in some ways. It gets me choked up. I practiced a few minutes before the shoot, and I just couldn’t do it. I just couldn’t do it. So the producer said, “Forget about the script. Just tell your story.” And I could tell it. I could tell it in my own words because there was so much emotion behind it.

It was really hard, but really powerful, because we all have a Bailey story. If you’ve gotten in a car accident and an airbag saved your life, or your grandparents or parents have had a successful surgery that has elongated their lives, these things are saving our lives every day, and we don’t think about it.

And economic freedom made those things possible.

Economic freedom made those things possible. This is interesting because in our conversation we’re jumping from individual behavior and parlaying it up to economic freedom. The way to think about it is if God has created us uniquely, we need to be free to live out what that is. Whether it’s opening a food truck, or being a neurosurgeon, or being a janitor or a hedge fund manager. If God calls you to it, it’s good, and you need to be able to pursue it.

Look at Venezuela right now. Look at this place. We’re destroying peoples lives because they can’t wake up and buy a loaf of bread and get on with their day. We’re making it very hard for people be free to live into what God has called them to do.

In this regard economic freedom saves lives, not just in the immediate – I have bread today – but it allows people to engage in entrepreneurial creativity that creates the things that saved my daughter’s life. Or the airbags that save our lives. Or the heart surgery that saves lives. It forces people to focus not just on the short run, but on the long run, too.

What can Christians do to promote economic freedom?

We have to understand what economic freedom means. We have to talk about it. Economic freedom is not some hard, mathematical remote thing. It’s just about wanting a society where we’re free to choose how to live our lives. From that comes lots of opportunities, and lots of wealth creation, so that we live longer, more productive lives where we’re not oppressed by poverty.

So we have to understand what economic freedom is. And in places where we see a lack of it, how do we advocate for it? Look at the changes in China right now. They’re on the path towards more economic freedom. We need to encourage that. We want the people of China who have been oppressed by poverty and communism for so long to be able to live like we do.

Part of it is understanding what economic freedom is, and then advocating for it, and then finding ways to trade with people. You do that all the time. When you go to the grocery store you’re trading with people.

How do you hope people will react to this video?

I hope people see economics as relevant. That it matters to their daily lives. That it’s not about GDP. It’s doing what you’re supposed to do with intentionality and purpose. We all want to make a difference in the world. We all do. I think it’s written onto our hearts by our Creator. We want to have the best tools at our disposal.

An example I use in my classroom is that if I walk to the top of a ten-story building and walk off the side, I’m going to get hurt. Gravity is my reality. If I don’t do something to overcome gravitity, put a parachute on or something, I’m going to get hurt. Economic realities are the same way. As believers, we can better advocate for social and economic policy when we’re armed with these economic realities. We do live in a world with scarcity, and we can’t just desire things to be free – we have to work to innovate to make things more plentiful. That’s a big shift in thinking.

When I think back to my Bailey story and the stories everyone has, we want more stories of strangers coming together because they had the right incentives to serve such that my daughter gets a feeding tube that fits into a three pound baby’s nose. That’s totally amazing. We want more of that, as often as possible, available to every income group. The only way to get it is more economic freedom.

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