Economics is not the study of money… it is the study of choice


I was having a discussion (I say discussion and not argument because to me argument has to much of a negative connotation like you are not open to the other person’s view) on whether wants are infinite.

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I was having a discussion (I say discussion and not argument because to me argument has to much of a negative connotation like you are not open to the other person’s view) on whether wants are infinite.

Economists define needs as finite and wants as infinite and economics is the study of how we use scarce resources to satisfy this wants and needs.

I still hold to the view that wants are infinite but she raised a couple good points.

Firstly, how many televisions do you need in your house before you don’t want another or how many slices of pizza can you eat …there is diminishing marginal returns and soon your want of a particular product becomes zero.

However, this is for a particular product and not all wants in general. In addition, she over simplified economics to only things that can be bought with money. But if you explore economics is about decision making and not just money which is a store of value and means of exchange rather than the want.

For instance economists analyse how people spend their time- trade off between work and leisure. That is why we have the theory of opportunity cost, using the right incentive and optimising by making decisions at the margin.

Nevertheless, one can argue that in the short term an individual can have their wants at zero. For example, many people, not only Jeff Bezos and Bill Gates can satisfy all their wants in a day or in a month… but in the long run, for a life time, they would have to optimise and choose the things they can do and the things they can’t. They may still be able to satisfy all their monetary wants (by this I also mean things that can be attained through money) but for other wants they would need to make a choice.

I was called a philosopher for defining wants as more than just monetary wants, but in fact sometime you have to choose between monetary wants like either travelling or staying at home during your vacation not because of money but because of the ‘utility’ you would gain between the two choices/wants.

This is why even within your finite life on earth, your wants are infinite.

So remember your choice is how you express your power, it is how you endorse a brand, or voice an opposition. It is how you improve your person, or grow your capacity and willpower. It is the sum total of who you are. So be aware of your thoughts, actions, habits and character because it will determine your destiny; don’t mindlessly respond to incentives.

God Bless

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