Spiritual Insights from Economics

When I work with students in high school and college who are taking courses in economics I make it a point to be up front with my overall viewpoint on the subject. Having studied economics at length it ultimately became clear to me that the models used in economics do not necessarily reflect human behavior in the real world. In fact, the assumptions used to make the math and the models work essentially imply that virtually all conclusions and predictions are essentially meaningless. Economics models a fictional world of utility maximization and uniform self-interest. Nonetheless, the tools and principles of economics are not utterly useless. An approximation is the best we can do in this arena because economics attempts to deal with the sum total of human behavior.

Interestingly enough, every single decision that we make can be construed as an economic decision. This is thanks to the idea of opportunity cost, a fancy economics term that simply means that by choosing to do something you also choose not to do anything else. Scarcity is the primary motivation behind economics. The central question of the subject is how we maximize limited resources. In such a mindset each decision that we make becomes critically important because every thing that we do also prohibits us from doing any other number of other things with our time and energy. When we look at economics we shouldn’t be surprised to see that there are significant obstacles – our own irrationality for starters – to forming reliable and robust models that properly account for and predict human behavior.

Another core principle in economics that actually applies to the real world somewhat is the notion of diminishing marginal utility. Let’s do a bit of translation from economics to English here. Diminishing just means decreasing or lowering. Marginal utility means the value gained from the next unit. So you’re hungry and you eat a slice of pizza (pepperoni white pizza from Grimaldi’s is an excellent option). Economists would say that you gained a certain amount of utility, or value, from that slice of pizza. The idea of diminishing marginal utility is that the more slices of pizza you consume the less value each slice has to you. We can clearly see that the 12th slice of pizza doesn’t hit the spot the same way the 1st did.

With these concepts of opportunity cost and diminishing marginal utility in hand, we can take a step back from economics – a system of thought that attempts to make sense of the physical world as well as human decision making – and see if we can’t draw any interesting conclusions about the spiritual world.

The central problem of economics is scarcity. However, this is a physical constraint that God is not subject to. Economics becomes irrelevant when limitless resources are available. We are spiritual beings living in a physical reality. Many of the challenges we face arise out of us attempting to apply physical principles to spiritual reality. Because God transcends time, opportunity cost doesn’t properly apply either. When we look at ourselves through this lens something dramatic becomes clear.

The opportunity cost of making decisions according to our own will and knowledge as opposed to following the will of God for our lives is truly infinite. Only the flesh could prefer something carnal and ephemeral to something spiritual and eternal. Not only that, but God – along with God’s Word – is not subject to diminishing marginal utility. In fact, rather than a value that decays with additional use or exposure, reading scripture and spending time in the presence of the Lord in prayer actually has an exponentially increasing value.

Economics is a flawed, natural system. It can be useful withing a particular framework, but perhaps the most important insight it has given me in my life is to help discern spiritual things that can be identified by their absence of conformity to the core economic principles of opportunity cost, scarcity, and diminishing marginal utility. I know that from my own experience I could read the same passage from the Word of God dozens and hundreds of times and there will still be something new that taps into an unlimited surplus of value.

Recognizing the breakage of the iron laws of economics was one of the ‘glitch in the Matrix’ moments for me in my journey from agnosticism to Christianity. Sometimes the times when we gain the most insight occur when we arrive at the places where certain bedrock assumptions that we have been holding fail to apply.



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