No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter One: Introduction to Economics 22 we can objectively assess valuations. For example, Christians have a strong value for the dignity of life because humans are made in God’s image. Objectively, we know that human life is valued over animal life because we were created in God’s image, and the animals weren’t. We were created to be God’s agents to rule and subdue the earth (including animals). Yet, to claim certainty of how God will value any particular item is problematic. At best we may be able to say that Christians should value one item over another, but then by how much? In the end, we have our individual subjective valuations of what we believe represents God’s objective valuation. Two additional assumptions seem true by all experience, so we can safely employ them in our analysis. First, people prefer more to less . I prefer six iPhones to one iPhone, even if I can only use one at a time. I might sell the rest; I may want a fully charged iPhone around always. There are a myriad of other reasons to want more. But I usually want more. Yes, one could imagine a world where we all have millions of iPhones in our houses and where each additional iPhone is a bad thing, but that is not the world we live in and does not describe the economic choices that most of us make. While it’s true that for most of us, the cost of a 2 nd or 3 rd iPhone isn’t worth what we’d have to give up, so we never buy it, that does not change the fact we’d likely prefer two iPhones to one. And if the price were low enough, we’d buy a second. A second similar assumption is that we prefer consumption today to consumption tomorrow . Or, as the character Wimpy in the Popeye cartoon used to say, “I’ll gladly pay you Tuesday for a burger today.” If you have the choice of having an ice cream cone right now or one next year, which do you want? Unless you are very full right at the moment, or for some strange reason don’t like ice cream cones, you’ll take the ice cream today. After all, who knows what tomorrow may bring (James 4:13-14 )? Sooner is preferred to later, and we’ll see in chapter 5 that this means that we’ll have to pay more to consume today (interest) if we want to spend money that we don’t have. The assumptions of methodological individualism (only individual people make choices—organizations don’t) and subjective value (people assign value based on their internal judgments) are key to our understanding of what some economists call acting man (yes, “acting man” includes females also!). Acting man makes choices by considering costs and benefits in action. Acting man continually assesses their current situation, makes plans to improve their situation, and acts based on those plans. Their mind imagines a causal connection between means that are within his reach and ends he hopes to achieve. Hopefully you can see yourself as an “acting man.” You may imagine what you are going to do this weekend. Introspectively, you may think that your weekend would be better if you went on a date or attended a football game. Internally, you consider what you might be able to do to get to go on a date (either ask someone out or communicate your availability) and compare that with the option of using some of your money to purchase a football ticket. In your mind, the benefits of the actions you decide to take to achieve these ends must exceed the costs. Every one of our actions includes an internal acting man: a theoretical construct to describe human action, focusing on the way humans evaluate situations and continually strive to “substitute a more satisfactory state of affairs for a less satisfactory”