The Good-Versus-Bad Model of Economics

I came across this website called CyberEconomics the other day, that explains the various aspects of micro and macro economics. I studied economics back in school as well as in college, but the approach quoted below made much more sense than before:

People who do not understand economics still try to make sense of the world around them by trying to see pattern in the facts they observe. Often they use a simplistic “good-versus-bad” model. In a good-versus-bad model there are two conflicting groups who are classified as good people and bad people. These groups are usually involved in a zero-sum game: one person’s gain is another’s loss. Further, evil motives, possessed by the bad people, lead to bad results unless these people are in some way controlled. Good motives lead to good results.

The good-versus-bad view of the world is attractive because we are able to understand the model at a very young age and because we see the model used so often: in fairy tales, in comic books, in movies, and in television shows, among other places. Because we know how to use this model, and because our culture discourages use of alternative explanations such as fate or mystery, it is easy to fall back to this model if we do not have a more sophisticated model to explain our world.

As the author suggests, real-world economics involves learning to see reality from new perspectives, beyond the good-versus-bad model. Read on, and other articles at CyberEconomics.

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