Economists shouldn’t assume unlimited consumption is good. Liberty is choosing goals | Opinion

I was once advised never to give advice. Perhaps I am just not a good listener.

Economists like me are regularly asked for advice, such as how to invest, start a business or vote. But that’s not necessarily what economics is all about.

Consider two different definitions of my discipline.

First, the modern textbook definition that regularly comes up on a Google search: “Economics is a social science that studies how individuals, businesses, governments, and nations make choices to allocate scarce resources to satisfy their unlimited wants and needs.”

This definition is pragmatic and descriptive. This description of the study of economics is commonly found in introductory textbooks. It recognizes the problem of scarcity — limited resources versus unlimited wants — and the reality that we must make choices.

However, this definition carries a subtle presumption that should concern all of us. It implies that satisfying unlimited wants and needs is an unqualified good. This is not necessarily true. Ever-increasing consumption is generally not considered virtuous and thus not just a neutral, economic problem.

A further problem with this definition is that it conflates different types of actors, individuals and governments, without recognizing that government actors do not necessarily behave with the same incentives or constraints as individuals. The subfield known as public choice economics corrects this line of thinking by demonstrating that politicians and bureaucrats act in self-interest too, and often at odds with economic efficiency or personal liberty.

Nearly 100 years ago, economist Lionel Robbins proposed a more precise and value-neutral definition, writing, “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.”

As above, this definition acknowledges scarcity and choice but crucially emphasizes the alternative uses of means, reflecting a fundamental economic principle known as opportunity cost. Since we all must make choices, we can analyze choices and represent the cost of such decisions as the potential benefit an individual or group misses out on when choosing one alternative over another.

Robbins’s definition of economics aligns more closely with Adam Smith’s foundational insights detailed in “The Wealth of Nations.” Smith showed that people flourish when allowed to pursue their own self-interest, divide up their work in the most efficient manner they can find and trade the product of this work freely. If economists stick to Robbins’ view of the discipline, it leaves open what ends people pursue, that is, their self-interest, and focuses the analysis instead on how they make those decisions.

Robbins’ definition is superior to what many students are reading in college textbooks. It respects the centrality of choice and scarcity while not assuming the legitimacy of all human desires. It allows economics to remain a science of means, leaving the ends to be judged by the individual based on their worldview. From my Christian worldview, and that of my university, this is preferable, as it leaves room to ask whether our ends align with the teachings of Jesus.

On the questions of tariffs, interest rates, or any other economic policy, economists need not give advice. Rather, they can limit economic analysis to the question of whether the means will achieve the stated end.

We’ll see how well I and other economists can listen to such sound advice.