Thursday, November 20, 2014

Spiritual Economics

Economics is not science, but its study is most useful when it accurately maps observable human tendencies. At its core, economics is guesswork about what people tend to do in any given set of circumstances. Naturally it assumes rationality on the part of those it analyzes; a common sense that can be documented, predicted and acted upon to the benefit of the observer.

The Lord and the apostles frequently appeal to experience, observation, rationality and common sense to encourage sound judgment in the spiritual realm. Some familiar examples: “You know how to interpret the appearance of the sky, but you cannot interpret the signs of the times”, “Do you not know that your body is a temple of the Holy Spirit within you?” or even “... the sons of this world are more shrewd in dealing with their own generation than the sons of light”. Each appeals to things that should be obvious to all to encourage proper thinking and conduct in the believer.

N. Gregory Mankiw lists ten principles of economics, four of which have to do with how people make decisions. I doubt Mr. Mankiw has spent a lot of time meditating on how to apply his ideas in the spiritual realm, but to the extent to which his principles reflect reality, they are also useful reminders to us of spiritual truths.

1. People Face Tradeoffs

Mankiw says that in order to acquire one thing that we like, we usually have to give up another thing that we like. While children may not have developed the ability to make the best long-term choices, rational adults tend to opt for things that provide the greatest value over time.

This is something the Lord made very clear to his followers when he told them “No one can serve two masters”. He applied it to the choice between serving God and money, but the principle itself is a larger one that goes back to Jehovah’s word to Israel, “You must not have any other god but me”.

But the world rarely frames a choice for us in such explicit terms. When asked to choose, for instance, between the prospect of romantic love with a beautiful woman, or a partner of demonstrably better character who is maybe not quite so physically attractive, who thinks of Exodus 20:3? Who stops to ask, “Which choice of partner would be a better expression of devotion to Christ?” Not many of us, I fear. If we did, I’d have spent many, many fewer hours of my life listening to ex post facto rationalizations, quite a few of them my own.

The question “Who am I serving here?” comes into just about every choice we make every single day of our lives, whether we notice it or not. Most of the time we don’t.

But tradeoffs are a fact of life, as Mankiw observes. Scripture encourages us to recognize that fact and make the best choices, rather than indulge the fantasy that we can “have it all”. We can’t.

2. The Cost of Something is What You Give Up to Get It

Mankiw says that because we face tradeoffs, making decisions requires comparing the costs and benefits of alternative courses of action. For instance, the cost of going to the movies includes the value of the time you spend in the theater, not just the price of the ticket. This is referred to as “opportunity cost”.

The Lord is not interested in an emotionally-based devotion that fails to take this principle into account, possibly because he knows that such short-sighted enthusiasm does not last. So he tells us to count the cost of following him. “No one who puts his hand to the plow and looks back is fit for the kingdom of God”, he says. Here again, he appeals to the natural realm for an illustration of spiritual truth. He asks, “For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?”

In fact, the Lord deliberately repelled those who had not thought through the implications of discipleship by explicitly setting the price too high for those who were not willing to choose him above all else, saying things like: “Go, sell what you possess and give to the poor”. 

Greg Mankiw says the cost of something is what we have to give up to get it. It sounds so obvious that it ought not to even need saying. But one wonders how many are being offered the gift of salvation these days without the slightest clue that discipleship, at least in scripture, comes with a cost. The Lord spoke of those who hear the word and immediately receive it with joy and endure for a while, but when hard times arise because of “the word”, immediately that person falls away. 

3. Rational People Think at the Margin

Economists generally assume people are rational creatures. A systematic and purposeful person pursuing an objective often does so in increments, or “marginally”. An example: Water is cheap, while diamonds are expensive, because water is plentiful. Therefore the “marginal benefit” of any single cup of water is small. On the other hand, because diamonds are rare, the marginal benefit of a single diamond is considerably greater. If you think at the margin, a diamond generally makes a better choice — unless of course you happen to be lost in the desert.

“High margin” goods are those that possess comparatively high value relative to their acquisition cost. And the things of God, we’re told, are very high margin. The psalmist grasped this concept when he wrote:
“For a day in your courts is better than a thousand elsewhere. I would rather be a doorkeeper in the house of my God than dwell in the tents of wickedness.”
Mary understood spiritual economics all too well when she poured an alabaster flask of expensive ointment on the head of the Lord Jesus. The disciples (probably Keynesians at heart) could only respond “Why this waste?” They didn’t think at the margin.

Or we could consult our friend the psalmist again:
“… the rules of the Lord are true,
and righteous altogether.
More to be desired are they than gold,
even much fine gold”
Fellowship with God, the word of God and the person of Christ: these things are the very definition of high margin in the spiritual realm. Many people know the joy of salvation. Not so many think like Mary, but she may have been among the most rational people in scripture.

4. People Respond to Incentives

Mankiw teaches that because rational people make decisions by weighing costs against benefits, their decisions may change in response to incentives.

While modern life conditions us to deride those who respond to incentives as mercenary, we have to concede that scripture is riddled with incentivist language from beginning to end: “I will make you a great nation,” God says to Abraham. Incentive. “I will make you fishers of men,” the Lord says to those who became disciples. Incentive. “There is in store for me a crown of righteousness,” says Paul. His incentive, among others.

Even the Lord Jesus quite rightly responded to incentives:
“… Jesus, the founder and perfecter of our faith, who for the joy that was set before him endured the cross, despising the shame, and is seated at the right hand of the throne of God.”
Jim Elliot said “He is no fool who gives what he cannot keep to gain that which he cannot lose.” If there’s a better cost/benefit arrangement than the Christian life obtainable anywhere, I’d sure like to know what it is.

*     *     *     *     *

I am not, of course, implying that Greg Mankiw’s economic principles have their basis in eternal truth (or, even worse, that we should assess how we feel about the commands of God on the basis of whether they commend themselves to us as common sense).

But it does seem to be a frequent practice of the writers of scripture to appeal to that which ought to be obvious to any rational observer.

So how do you make your life decisions? For those who recognize their need of sound advice with a value that extends well beyond this life, I recommend a course in spiritual economics. I will concede that to those with no experience of its rewards, such a value system may appear odd, risky or illogical.

But to those who practice it, it’s just common sense.

1 comment :

  1. "We shall require a substantially new manner of thinking if mankind is to survive."

    Why Socialism?

    By Albert Einstein

    From Monthly Review, New York, May, 1949.
    [Re-printed in Ideas and Opinions by Albert Einstein]
    Transcribed by Lenny Gray


    Is it advisable for one who is not an expert on economic and social issues to express views on the subject of socialism? I believe for a number of reasons that it is.

    Let us first consider the question from the point of view of scientific knowledge. It might appear that there are no essential methodological differences between astronomy and economics: scientists in both fields attempt to discover laws of general acceptability for a circumscribed group of phenomena in order to make the interconnection of these phenomena as clearly understandable as possible. But in reality such methodological differences do exist. The discovery of general laws in the field of economics is made difficult by the circumstance that observed economic phenomena are often affected by many factors which are very hard to evaluate separately. In addition, the experience which has accumulated since the beginning of the so-called civilized period of human history has -- as is well known -- been largely influenced and limited by causes which are by no means exclusively economic in nature. For example, most of the major states of history owed their existence to conquest. The conquering peoples established themselves, legally and economically, as the privileged class of the conquered country. They seized for themselves a monopoly of the land ownership and appointed a priesthood from among their own ranks. The priests, in control of education, made the class division of society into a permanent institution and created a system of values by which the people were thenceforth, to a large extent unconsciously, guided in their social behavior.

    But historic tradition is, so to speak, of yesterday; nowhere have we really overcome what Thorstein Veblen called "the predatory phase" of human development. The observable economic facts belong to that phase and even such laws as we can derive from them are not applicable to other phases. Since the real purpose of socialism is precisely to overcome and advance beyond the predatory phase of human development, economic science in its present state can throw little light on the socialist society of the future.

    Second, socialism is directed toward a social-ethical end. Science, however, cannot create ends and, even less, instill them in human beings; science, at most, can supply the means by which to attain certain ends. But the ends themselves are conceived by personalities with lofty ethical ideals and -- if these ends are not stillborn, but vital and vigorous -- are adopted and carried forward by those many human beings who, half-unconsciously, determine the slow evolution of society.

    For these reasons, we should be on our guard not to overestimate science and scientific methods when it is a question of human problems; and we should not assume that experts are the only ones who have a right to express themselves on questions affecting the organization of society.

    http://www.huppi.com/kangaroo/Einstein.htm

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