Sunday, September 2, 2018

Commonly held, but mistaken, economic beliefs

From Folk-economic beliefs: An evolutionary cognitive model

FEB 1. International trade is zero-sum, has negative effects. ...This belief may take many forms. For instance, trade is said to create unemployment at home because foreigners instead of locals are making the things we need (Wood 2002, pp. 53–55). ...

FEB 5. Markets have a negative social impact ...The belief is that markets as such produce negative outcomes for most participants. ...

FEB 6. The profit motive is detrimental to general welfare. ...One version of this belief is that there is a special class of “excessive” profit that differs from the regular or fair allocation of profit to businesses (Wood 2002, pp. 10–12). ... Contra Adam Smith, the notion that private self-regard creates general welfare seems to be unintuitive (Rubin 2003).

FEB 7. Labor is the source of value. ... It is also present in opinions on the unfairness of low wages for hard or unpleasant jobs, especially those involving hard physical labor.

FEB 8. Price-regulation has the intended effects. ...For example, in the United States, many cities imposed rent-control in the 1960s – and such measures were a major item in politicians’ platforms (Dreier 1999, p. 211) – with the goal of creating an ample supply of cheap housing;


  1. The econ class has certainly opened my eyes to some of my own FEBs - one is that government subsidies for farmers are always a positive overall - then I listened to Money Talk about 'Big Government Cheese' - I know I have voted previously based on my own commonly held economic beliefs - now I know to dig a little deeper!

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