Economic Analysis Only Provides us with Things to Consider

My father recently told me that when he was young, and he would go shopping with his mother, she knew every single person she bought merchandise from. Today, he says, he hardly knows anyone he buys things from.

Of course, taking a very limited amount of factors into our analysis, Walmart and other such giant chains are "more efficient" than the numerous mom-and-pop shops with which my grandmother dealt. But what is the effect on human well-being of moving from a society of interactions with friends and neighbors to one in which one deals largely with anonymous strangers? How will this play out over three or four generations?

Obviously, no economist can answer those questions with enough certainty to be able to plug a number into some utility function and decide "Big chains are (not) beneficial."

Economic analysis, to give us any clear answers, must carefully circumscribe what it includes. As such, the best it ever gives us is something to consider in our policy analysis. It can never tell us definitively what to do.

7 comments:

  1. Just for fun, send this comment to the ideologues at Econlog or Café Hayek. Then watch them explode.

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  2. But what is the effect on human well-being of moving from a society of interactions with friends and neighbors to one in which one deals largely with anonymous strangers? How will this play out over three or four generations?

    Wouldn't this be outside of the realm of economic analysis?

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    Replies
    1. Yes: that was the very point of this post!

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    2. Well, could it though?

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  3. By the way, would conversation be an example of what you are talking about, too? Specifically, the way Masnick says his reader lack an understanding of economics?

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