I’m defining economics as fundamentally — the study of cause and effect of decisions about how to allocate resources which have multiple uses, and, what incentives those decisions create in addition to their outputs.
It’s possible to think “economics = money”; however, it doesn’t. A multi-use resource that you decide what to do with every day is time, attention, food stuffs, and yes — your money.
I pulled parsley, mint, oregano, and basil from the garden. I harvested tomatoes. I chopped them up with a cucumber and added tahini and lemon juice. That was breakfast. The inputs that went into the product that is breakfast are multiple use inputs — any of those ingredients could have been put to other uses. Today, I chose to allocate them towards a salad which I hope will have the consequence of lowering inflammation, blood pressure, improving insulin sensitivity, reducing a fatty liver, and maybe improves my already-Adonis-like physique. But wait, there’s more….
What incentives does my decision create?
Perhaps I might feel satiated and energized as a result of my meal and I might want to make this meal again. Maybe I might appreciate how cheap (in money terms) it was to grow these ingredients and I might grow them again — cheap upfront cost with a large payout that is my health. Maybe with better metabolic health, I might be able to enjoy more foods that aren’t as productive for my health? Or maybe I might not care about them anymore. I find it interesting to step back and meta look at what I’m incentivized to do next as a result of that breakfast — write this blog!
Allocating your energy and your time are other forms of economic decisions. What incentives are created by deciding to watch 24/7 news? It’s been said that we’re wired to look for bad news, perhaps the incentive that’s created is to watch more bad news? And the unintended consequence of that might be stress?
Much of our behaviors are governed by incentives. It can be worthwhile to think about how you allocate your resources (time, energy, attention, money, food, etc) and what incentives those decisions create for you. And then ask yourself — are these the right incentives to maximize for your long term benefit?
Only you can answer that.
