Here is a diagram/summary/cheat sheet:
While it sounds New Age and hippy-ish, some areas of economics are moving away from the traditional scarcity model of the world (a world of limited resources and unlimited wants). And I dare say that it’s a movement toward a more human view of life, with the kind of thinking that sounds a lot like:
Yes, but I’m troubled by the use of the word “unlimited”. Sure, I may sometimes want more; but sometimes, I don’t. I mean – I don’t endlessly eat. There is a point at which I really don’t want some more, sir, even if you offered the most decadent and ornate dessert that all of man’s genius could construct, I could maybe handle a small taste – maybe – but then I’d really rather go home for a nap.
I guess what I’m saying is: in theory, yes my wants may be unlimited. But in practice, my wants are quite limited. I want to live reasonably well, and I want to have some feelings of value and worth. The rest is nice to have but not essential; I can’t have it all of the time (if I have a home and a holiday home, I can’t really inhabit both at once); and really, the more I have, the less that $1 bill in my pocket matters to me.
This is basically the field of behavioural economics. We’re learning that it might just be possible to have all the wants fulfilled – and it doesn’t require “unlimited” resources. It requires some behavioural tricks and habitual thought pattern adjustments. It’s almost spiritual.
And to some extent, we’re already doing some of that with the sharing economy. Airbnb, Uber, etc – they’re all pointing to a different way of utilising resources. You can use a resource but not own it indefinitely.
I think it’s worth thinking about. Especially as it’s Thanksgiving, and one of the surest ways to feel like your wants are fulfilled is to focus on what you have. That’s not just an aphorism: some science.
Rolling Alpha posts about finance, economics, and sometimes stuff that is only quite loosely related. Follow me on Twitter @RollingAlpha, or like my page on Facebook at www.facebook.com/rollingalpha. Or both.