Trade-offs

Read this book! It is incredible. The title is Trade-offs: An Introduction to Economic Reasoning and Social Issues. It's a short read, only 125 pages but the ideas contained in the book are the exact reasons I love Economics. The author, a professor at Ohio State University uses basic economic principles to analyze a variety of social issues, or as he says in the preface, entitled "Welcome to My World", "I...use economic reasoning to frighten people."

The most basic element of economic reasoning is the idea of trade-offs, that for every decision there are pros and cons. Viewing the world in this way, the concept of right and wrong becomes very blurred. This worries some people, as it can be very comforting to know that what you're doing is right. But what is right depends on how you define what right is. As he says again in the preface:

Cost benefit analysis allows economists to detach themselves not only from their personal views, but from favoring one side or the other of whatever social issue is at hand...if you are on one side of an issue, you are on the wrong side.

He uses this type of reasoning to discuss among other things, organ donation, file sharing and property rights, product saftey, and smoking. The specific issues he discusses aren't so much the point, but the way he analyzes these issues is the power of the book.

I think all too often, and you see this is politics all the time, only the pros of an issue are considered, or that's all that's reported. As an example, here are the last two paragraphs in the book, dealing with the topic of banning smoking in public places. The policy decision both people support is same, but the analysis is starkly different. First, the politician:

I have decided to support the ban of smoking in all public bars and restaurants. I feel that this will greatly benefit nonsmokers from being bombarded with the deadly cigarette smoke of others. I also feel that this will benefit smokers who will now have fewer social opportunities in which to smoke, and this can only improve their health. This policy will also benefit bar and restaurant owners because their businesses will soar in profitability due to the large potential customer base of nonsmokers who will now, without hesitation, gladly patronize smoke-free establishments. I apologize if I have failed to recognize any other group of individuals who are going to benefit from this policy.

Now the economist:

I have decided to support the ban of smoking in all public bars and restaurants. I feel that this will greatly benefit nonsmokers from being bombarded with the deadly cigarette smoke of others. I recognize that smokers may be hurt by this policy by having their freedom to smoke curtailed. I also recognize that bar and restaurant owners may lose out if this policy reduces the profitability of some businesses. However, recognizing that there will be winners and losers to this policy, I sincerely believe that the benefits of this policy outweigh the costs.

Personally, I'd rather be the economist, the person who can systematically judge issues on an a case by case basis viewing all sides. In fact, I believe so strongly in this idea, and this book, that if you're reading this post and you want a copy of this book, I will see to it that you get one.