At the wonderfully named Worthwhile Canadian Initiative blog, Frances Woolley looks at some of the ordinary human cussedness that prevents wonderfully clear and understandable economic theories from working quite as efficiently as their formulators expect:
1. Economies grow when people buy stuff.
2. Over time, people accumulate more and more stuff.
3. People can only handle so much stuff. Sock drawers get full of socks. Cupboards get full of cups. Bookshelves get full of books.
4. It’s hard to get rid of stuff. Economic models typically assume disposing of unwanted things costs nothing. But life isn’t like that. Sorting out stuff that can be tossed from stuff that is worth keeping takes time and effort.
5. People are “loss averse”. Throwing things away — clothes that don’t fit, vinyl LPs — hurts psychologically.
6. There’s no need to replace perfectly good stuff. True some stuff, like mobile phones, only lasts a year or three. But other stuff, like cast-iron frying pans, lasts for decades.
Taken together, observations 2 through 6 imply that, as people get older, they buy less and less stuff. Combined with observation 1, these observations explain why countries with aging populations experience lower rates of economic growth.
My only quibble is with the final sentence of point 3: bookshelves don’t get full … you just run out of immediate book storage options. Bookshelves are never really full, they’re just temporarily over-booked.
MWA… MWA… MWAAAAAAAAAAAA
Comment by Liam — January 3, 2015 @ 03:10