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Author name #46
Member since Apr 2010 · 32 posts · Location: Brisbane
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In reply to post ID 2629
The examples given are really basic. Every decision is weighed up by costs to the individual. Its the principle of scarcity. We do certain things with our resource constraints.  You can't actually avoid it as you do things you see as somehow beneficial to you with limited resources. We are all limited so you decisions are influenced as we try to live the best life we can or Economically speaking efficiently apply our resources.

Economics is about trying to understand what drives these choices and realistically if you can predict a consumer preference on a good you will make money. That is why it is so heavily driven into the economy and financial applications.  I see you won't take my words for it or that textbook I quoted **edit**( As in you need more evidence to alter your opinion). But you need to read freakanomics, look at maybe Kennith Arrow's impossibility theorem (The para-dime of voting, which is all decision and which avoids money all together), or get you hands on some Economic textbooks. They provide examples and are proof of research into social economics, and all aspects of life. Just go to a book store and read the first paras in the first chapters. Socioeconomic papers might come up in Google to.
This post was edited on 2010-04-26, 22:10 by Kinkas.
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Member since May 2011 · 2485 posts · Location: Brisbane
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I agree with you: Economics is about determining the reasons people act with regards to money.  Beyond that you are essentially taking the premise to an illogical extreme.  You could do this with any topic (everything is about your car).  You keep saying things that back me up: predict consumer preference, make money, financial applications, resources, scarcity.  Economics is all about value: enumerating, exchanging, choosing.

If economics really was the study of all human decision making, it'd be the single most important thing in the world, and it ain't.  If you believe it is, please see my comment about things outside your sphere having different values than you might think they do.

Or, if you want to pursue this, pull out some proof, something that explicitly states that economics is the study of all human decision-making.  Not that I'll grant you a victory even then, I'd probably have to tear that guy a new one too.  ;)
BLEARGH
Author name #48
Member since Apr 2010 · 32 posts · Location: Brisbane
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Whenever a decision must be made a context of scarcity it involves trade-offs and we can think of it as an economic decision. That is a decision where securing something of value to us means we must go without some other thing that we value. Economics is the study of how people make choices under conditions of scarcity. - Principles of Economics 2nd Editions,2009; R.Frank (Cornell University), S. Jennings (University of Tasmania), B. Bernanke (Princeton University).

This explanation is the taught explanation in all the textbooks and basic introductions to the Science. The idea that money rules all, is wrong. Money is a manifestation of our personal value in a form that can be traded universally. Technically that is why economics covers decisions, as money does not have a universal application in a realistic trading sense. For example conscription; Milton Friedman, who won a Nobel Prize his work on conscription, analysed the difference between a solider conscripted and one that signed up willingly. He found that if you had a force of only willing men, they are far more efficient as they are wanting to trade their life of the protection of the country. This choice had nothing to do with money but the well being of the country and their families.

Another example, when someone picks a partner, if they are not a goldigger, they choose them on the basis of looks and personality. To some, looks may > personality or vise versa. But its a decision based on what you value more in a partner. This said, your resources available to you ie. your looks and personality restrict what eligible ladies are within your means. And yes money does come into this, though I isolated the part as it is the main determining factor.

Here are some sources from a credible site and organistation. They are all examples of economic application outside the realms of money. I will only post three and find other sources:

http://www.econlib.org/library/Enc/PrisonersDilemma.html - This is the Prisoners Dilemma, traditional economic failure of rational within human beings.

http://www.econlib.org/library/Enc/LawandEconomics.html - How Economics is Applied to Law

http://www.econlib.org/library/Enc/BehavioralEconomics.html - Clear description of Economics and its coverage of behaviour.

Here is an extract of the description of Behavioral Economics:
How Behavioral Economics  Differs from Traditional Economics

All of economics is meant to be about people’s behavior. So, what is behavioral economics, and how does it differ from the rest of economics?

Economics traditionally conceptualizes a world populated by calculating, unemotional maximizers that have been dubbed Homo economicus. The standard economic framework ignores or rules out virtually all the behavior studied by cognitive and social psychologists. This “unbehavioral” economic agent was once defended on numerous grounds: some claimed that the model was “right”; most others simply argued that the standard model was easier to formalize and practically more relevant. Behavioral economics blossomed from the realization that neither point of view was correct.


If economics really was the study of all human decision making, it'd be the single most important thing in the world, and it ain't.

It is the study of all decision, there is yet to be a decision where you can say value has not been weighed up. So it is considered very important, as to why economists run all central and world banks, are the backbone for politicians in there economic management, solve problems within society (drugs) and have a category in Noble Prizes. This said, it is as you said. Its not the most important thing in the world, because although it is a study of behavior and choice it lacks precision, and the human mind is to complicated to do anything but place an estimate on (although this estimate is really close and reliable). So it plays its role but it is not exact and there are many theories to which the most efficient way to do something is approached. But really, you can put a monetary value on anything (i.e how much money do i need to pay you, to kill a baby). So therefore it encompasses every decision anyway. Money did not come before choice. Choice is the core, that is why it is about choice.
This post was edited on 2010-04-27, 00:56 by Kinkas.
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Member since May 2011 · 2485 posts · Location: Brisbane
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Quote by Kinkas:
This explanation is the taught explanation in all the textbooks and basic introductions to the Science.
We are so close to agreement here.  You keep saying things that make total sense then extrapolate things that are utterly bizarre.

http://www.econlib.org/library/Enc/PrisonersDilemma.html - This is the Prisoners Dilemma, traditional economic failure of rational within human beings.

This can be applied to economics.  There are lessons economists can learn from this.  It is not, strictly speaking, an economic theory.  Similar complaints apply to the rest of your links.  Yes, economic theory can provide insight, or learn from these other things, but that is not the same thing as saying economics encompasses all of these things.

You can work out the economic values for a decision I make about the directions taken during my afternoon walk, but while that might help you learn about people in aggregate, it does not prove that my decision was made with any kind of value, scarcity, or economic thought process at all.

So yeah, economics may be able to benefit many other branches of thought, and may benefit from these other branches, but it's not the grand-daddy unified theory of all human activity.
BLEARGH
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Member since Apr 2010 · 32 posts · Location: Brisbane
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Ok, I think we actually may be on the verge of agreement here hahaha. I would agree it does not encompasses everything, in the sense that you can apply it to everything, though in a lot of instances such as taking the walk or a lot of cases where the human rationality is at it worst i.e cases where human behave completely random, or is to trivial or irrelevant to use it.

It is not, strictly speaking, an economic theory.

Although its value is not strictly beneficial to economics alone, the actually theory was designed by economists and there are a lot more complicated models than that one. I really just wanted to show economics does fall outside money, this analysis was done without money and shows over values and other places to apply the Science. My examples, that I hand wrote, are other examples of places economists have successfully gone, (the relationship example was bases on Gary Becker's work). Especially make sure you read Kennith Arrows Impossibility theorem even if it is just the general jist of it, as although it is another example for me, it will be really interesting to you as it is about political failure. Though as you mentioned this is just benefiting one branch and not the whole lot. So I still agree its not all encompassing in the sense mentioned above.

You can work out the economic values for a decision I make about the directions taken during my afternoon walk, but while that might help you learn about people in aggregate, it does not prove that my decision was made with any kind of value, scarcity, or economic thought process at all.

You are missing the point of the walk, it takes time. The fact that you are taking a walk suggests you value the walk over something else, many other things infact. Its still a decision based on the value of your time. As to the directions, people don't walk along thinking value or scarcity or must think economically. But things influence a decision, its unavoidable. I know I am repeating myself a bit here, so could you clear up were you think exactly the area of a choice falls out, because if there is choice there is a decision. And although it might be trivial to look at from an aggregate side and matter absolutely zero and say nothing about that persons behavior, its still a choice, that you can deconstruct, not as a economist but as a person. Why did you go that way? What other ways could you have gone and why didn't you? What resources have your forgone to go this way, compared to others? (Oppotunity Cost + Scarcity principle).

So yeah, economics may be able to benefit many other branches of thought, and may benefit from these other branches, but it's not the grand-daddy unified theory of all human activity.

Overall I agree with this statement, it isn't the end all of everything. It is not completely exact though its foundations are strong. You can apply it to a situation, but there are also other ways than economics to apply as well. I.e to Afghanistan, diplomacy is one that does take precedence over economics. Though Economics does have its uses, the idea i put forth ages ago was a manifestation of incentives and disincentives (such as rebates (incentives) and taxes (disincentives)). I understand that most people think that it won't work fair enough, as it is a theory not proof. But the foundation of how i reached that conclusion is strong and relevant i.e (Iranian sanctions).
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