Archive for June, 2007

A Question of Heaven and Hell

Every economics textbook starts with an explanation of opportunity cost – the cost of something measured in terms of the next best alternative given up (Great, I’m starting to sound like a mugger again). There’s an opportunity cost involved in every choice we make. If I choose to go to university, it means I give up the income I could earn from flipping burgers at McDonald’s. That opportunity cost is added to the actual monetary cost of my university fees to give me the real cost of going to university.

You know, this concept got me thinking – about God. What’s the opportunity cost of believing in God? The time spent performing devotions to God, which could have been put to better use (assuming God does not exist)? The time and energy spent worrying about going to hell, which again could have been put to better use? The money spent buying religious items and giving donations, which might have been used to buy other things? The way I see it, the opportunity cost of believing in a God that requires regular devotion (read: an actual religion) is basically the time and money spent on religious duties.

What about the opportunity cost of not believing in God? If you don’t believe in God, and if God really does exist – then you’re almost certain to go to hell, or Purgatory, or whatever (This is assuming God actually punishes non-believers. We shall not enter into a debate on whether a just God would actually do that). Simply put, if you choose not to believe in God, you’re giving up the option of going to Heaven if God really does exist.

Faced with these two choices and their opportunity costs, it’s no wonder some people choose to believe in God ‘just to be on the safe side’. This argument is neatly summed up in ‘Pascal’s Wager’, which was invented by the great mathematician Blaise Pascal.

I think there are many believers out there who have come to this conclusion themselves. I suspect many people choose to follow a religion because the incentive to do so is very strong – no one wants to go to hell! It’s a straightforward case of economic behaviour among humans, and is (to me), a clear example of another economic principle stated in Krugman’s textbook: People will exploit opportunities for their own gain. Is not religious belief a ticket to Heaven? Again, I am making many, many assumptions here – most importantly I’m assuming that God will reward blind faith, and the believer in question is lucky enough to choose the right religion to believe in, because many religions make the claim that God will punish nonbelievers – so only believers of a particular religion will be rewarded. Another thing in favour of religious belief is that the rewards from religious belief are similar to public goods – they are non-exclusive (meaning any believer, whether rich or poor, can go to Heaven) and non-exhaustible (Heaven will not run out of space for believers – but there are religions that state only a certain number of people will go to Heaven). Yes, I am comparing Heaven to a traffic light. I really hope I don’t get struck down by lightning tomorrow. But Heaven is not exactly like a traffic light, because something is required to go to Heaven – belief. And it is strange that, given the incentive to believe in God, there are many, many people who choose to risk it all and not believe in God.

Curious, isn’t it, the way the human mind works? What is the cost of those few hours spent in church on Sunday or the mosque on Friday, compared to burning in hell for all eternity? Given these options, the solution seems obvious – get thyself to church at once! But, of course, humans who are already dead set against believing in God (for whatever personal reason) will rationalize their choice, to reduce the opportunity cost of believing in God, or to eliminate it altogether.

The first argument against Pascal’s Wager is the argument that God does not reward blind belief. I made this assumption a few paragraphs ago – and the whole wager collapses if it turns out to be false. Assuming God is all-knowing, He should know exactly who among his believers is truly sincere and who is just believing in Him ‘to be on the safe side’. Insincere believers may end up in Hell anyway. But, this is assuming that God makes Heaven and Hell judgments based on sincere religious belief. What if He makes decisions based on one’s individual merits? In this case, religious believers may still have an advantage of non-believers, if fear of going to Hell has made religious people more likely to follow the tenets of their religion, which are usually morally upright ones. But this means atheists of morally upright character will also go to Heaven..in which case the atheists win, because they managed to go to Heaven without spending time on religious rituals and whatnot.

There are other arguments against Pascal’s Wager out there, which you can read on Wikipedia. The point I wish to make in this long convoluted post is that humans are capable of rationalizing seemingly irrational decisions. Choosing not to believe in God, after weighing up the two opportunity costs, is irrational. Even if you’re a nonbeliever, feigning a belief in God will work in your favour if God makes Heaven and Hell decisions based on blind belief. If that’s not the case, well, you’re done for. If you picked the wrong religion, oops. If God doesn’t exist, well whoop-dee-do. But why not cover as many bases as you can, just in case? Why bother rationalizing? If nothing can make you truly believe in God, then for goodness’ sake just pretend, to save your skin in case!

But humans are not rational beings. We rationalize irrational decisions.

I am human too.

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Getting started

Although I have a basic grasp of economics, I have decided to start reading an introductory economics textbook from scratch, as the A-level notes I studied previously were little more than a shopping list of points to memorize. For this purpose, I’ve picked Economics by Paul Krugman and Robin Wells, because it has lots of problem sets to work through, and I like Krugman’s clear, to-the-point writing style. I’m trying to make this experience as painless for me as possible (read: not boring), so I’m going to read ‘pop economics’ books as well – mostly books I picked up during my preparation for my Cambridge University interview. Yes, I applied to Cambridge to read economics. In hindsight it was no surprise that they rejected me – I lack passion for the subject, and ‘passion’ is one of the key things they look for, along with academic potential. My Cambridge application was driven more by a wish to study at one of the best universities in the world – the typical ‘dreaming spires’ ambition – if they had offered me a course in Anglo-Saxon, Norse and Celtic, I might have taken it :) Was I foolish? Yes, and no. If I had never applied to Cambridge, I would have never known that there was more to economics than what I read in my A-level economics textbook (in which case I would have resigned myself to three years of boredom and would be spending my precious summer holiday watching House MD instead). If I had not known this, I would not be attempting to discover the ‘wider world of economics’ now. I would not have known that there are many econobloggers out there who eat, sleep and breathe economics with a passion. I want to learn to love this subject as they do, so that the next three years will be more bearable. You could say I’m attempting to increase my economic rent, above the transfer earnings needed to keep me in this course. (Hmm. Not sure if that’s correct or not :) In any case my transfer earnings for studying economics are woefully low, because I have no choice - so if I can learn to like this subject, it would be a big boost in economic rent for me)

Well, I never managed to finish the many economics books I bought last year, so I’ll attempt to do that now. Here’s my reading list:

  • The Truth About Markets – John Kay
  • The Elusive Quest for Growth – William Easterly
  • Confessions of an Economic Hit Man – John Perkins
  • The End of Poverty – Jeffrey Sachs
  • The Accidental Theorist – Paul Krugman
  • Inequality Explained – Amartya Sen
  • The Undercover Economist – Tim Harford

As you can see, I’m pretty interested in poverty issues. One thing about economics that irks me is the way many economists push for trade liberalization without thought for those who will lose their jobs to foreign competition. Perhaps I don’t understand the true principles behind trade and globalisation, but I do know that losing a job is a terrible, painful and humiliating experience, and goodness knows how long it will take for unemployed workers to retrain themselves. It’s all very well for economists to sit in their comfy chairs and opine on the wonders of globalisation, but I’d like to see their reaction if their jobs are outsourced to economists in India :P

Well, this is my plan for the next three months. Let’s hope I can stick to it!

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Howdy

Hello everyone, and welcome to my economics blog. I’m not an economist, nor do I know much about economics – far from it! – but I will be spending the next three years pursuing an undergraduate degree in economics, and I want to make sure that this will not turn out to be the biggest mistake of my life.

You see, I do not like economics. I think it is boring, mind-numbingly so. I’ve just completed my A-level in economics, and to be honest I would have jumped for joy if that was the last time I ever had to crack open an economics book. Inflation, GDP, fiscal policy, externalities – the thought of studying these thingamajigs at tertiary level, with arcane equations thrown into the mix, makes me want to crawl under a box and hope that the entire economics subject would just go away.

If I hate economics so much, then why did I choose to pursue a degree in it? Simple – I had no choice. If I had my way I would have applied to an American university, which is flexible enough to let me take courses from every field I’m interested in – astronomy, anthropology and psychology are some of my interests. Without my explaining any further, let me just say that I had only a few areas of study to choose from, due to parental pressure. If I had rebelled there would have been no possibility of going to university. And I believe in the merits and value of higher education, even if it is in a discipline I dislike. To me a degree, especially a non-vocational degree like economics, is merely an indicator of a certain level of intellectual ability – I will hopefully be able to find non-economics related graduate jobs in the future. The financial rewards I stand to gain if I invest three years of my time in higher level study should be more than enough to cover the opportunity cost of me studying a subject that I do not enjoy.

But I am not going to condemn myself to three years of misery just yet. I’m not going down without a fight. In the three months before I commence my studies, I intend to do my very best to change my opinion of the subject. I will read around the subject, looking for the most interesting bits of economics that will hopefully convince me that the dismal science is really not that depressing after all (no, Freakonomics didn’t help at all).

Perhaps a considerable part of my animosity towards economics may be due to my weakness in the subject. In short, I suck at it. When studying A-level economics, I would memorize lists of factors, effects and causes of everything in the syllabus (factors of globalisation, reasons why the pound sterling is so strong, etc ad nauseum), in the hope that one of these would come up as a question in the exam and I could just regurgitate everything that I’ve learned. It has worked sometimes, but I know that rote memorization is no way to fully understand a subject. And the thing I hate most, besides studying something that I hate, is not fully understanding something. Questions that were worded differently, or required critical thinking just stumped me. I soon took to memorizing ‘evaluative points’ – little gems of ‘critical thinking’ that, when applied correctly in the exam, would earn me lots of marks. Of course this tactic would not work if a totally new question came up in the exam, which is a risk that I had to take, because I did not (and still don’t) understand basic economic principles and how to apply them to various scenarios. Fine, so I’m not a total blockhead – I do understand supply and demand, equilibrium, etc – but I’m talking about seeing the big picture. The ability to take one principle – say, monopsony theory – and see how it links with other parts of economics, and how it relates to the real world. In short, whenever I study economics, I always feel like I’m missing something. That I am looking at the world through a rolled-up newspaper, so I can only glimpse a little at a time.

Maybe it was because I never tried. Maybe I had no time, what with three other subjects demanding my attention as well. Maybe humans are just not natural economic thinkers. Whatever. I am not going to surrender just yet. This is my project for the summer holidays – to gain a good grounding of basic economic principles, and to learn to love the subject – if love is too strong an emotion, then at least a grudging respect for a worthy opponent.

I am not sure how many people would be interested in reading a student’s endless whines about economics – but if anyone has any words of encouragement, advice, criticism, etc – do leave a comment. I’ll be very happy to hear from you :)

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