In what way are our wants actually bounded?

December 20, 2014 4:42 PM

It is said that economics is about scarcity, and scarcity is defined by economists as the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. What economists and other social scientists have cried out and poked at this idea?

The statement that human wants are infinite seems, as a statement, not unlike the statement that humans are rational utility maximizers. That is, it seems like the kind of statement that some Herbert Simon-like figure would have poked at and found to be bullshit. It is bullshit, and O. Kayyam said so (FitzGerald):

"A Book of Verses underneath the Bough,
A Jug of Wine, a Loaf of Bread --
and Thou Beside me singing in the Wilderness --
Oh, Wilderness were Paradise enow!"

But it would also be nice to hear of people who had read Smith and Keynes and those people say so, also. I am aware of many fictional treatments of a time and place after scarcity. I would like to hear of economic and other social science treatments of such a time (post-scarcity economics by actual economists or other social scientists), and of the behavioral-economic study of the bounds to human wants. Journal papers and such would be the best.

posted by curuinor to Work & Money (6 answers total)

These situations are well-modeled, if not explicitly as non-scarcity or post-scarcity economics.

In regular old econ, people have indifference curves that describe how they evaluate the relative value of two goods*. Because it's assumed that wants are infinite, a hypothetical person just tries to get to the highest (up and to the right) curve that their budget allows. But there's no best point overall -- if your budget increases, you can always move to a higher indifference curve.

All that happens when you shift away from scarcity is that the indifference curves close up onto themselves and become circles or ellipses (or similar). Now, a hypothetical person has an ideal point (or sometimes bliss point) that describes the balance of goods that they like the most very bestest, with indifference contours around it. Think of a contour map of a hill, hence the term. The person's "job" is then to make choices that get them as close as possible to their ideal point.

We use ideal points and indifference contours all the time in spatial models of voting. They're boring and normal and well-understood.

In practice, open indifference curves with infinite wants aren't going to be substantively different from an ideal point that's just really far away, since most people are pretty sharply constrained by their budgets.

*Where one of the goods can be more than one good -- ie, they can describe how a hypothetical person values apples and all-other-things.
posted by ROU_Xenophobe at 5:08 PM on December 20, 2014 [2 favorites]

Our wants are bounded by our sentient participation in the web of life. See Charles Eisenstein's Sacred Economics for a comprehensive analysis of the oppressive fallacy of scarcity-based economics.
posted by ottereroticist at 5:13 PM on December 20, 2014

I am an economist, and I find your post hard to follow. Perhaps you could explain in what sense you envision a world without "limited resources"? Or perhaps I could point you to goods like water which are often given away for free? Even if some resources are effectively limitless, others will, tautologically, be limited (time, labor, goods that require labor, goods which are scare by design like artwork), and these will be the valuable ones.

It also is not clear to me how a world with limited wants requires a different way of thinking than one with unlimited wants. For example, a few thousand calories of food per day is quite sufficient for my needs; more would be superfluous. And yet thinking carefully about incentives is still the best way to understand outcomes in markets for food.
posted by deadweightloss at 5:21 PM on December 20, 2014 [1 favorite]

Best answer: There are two possible courses to affluence. Wants may be "easily satisfied" either by producing much or desiring little. ... The familiar conception, the Galbraithean way- based on the concept of market economies- states that man's wants are great, not to say infinite, whereas his means are limited, although they can be improved. ... Free from market obsessions of scarcity, hunters' economic propensities may be more consistently predicated on abundance than our own. ... The traditional dismal view of the hunters' fix goes back to the time Adam Smith was writing, and probably to a time before anyone was writing. Probably it was one of the first distinctly neolithic prejudices, an ideological appreciation of the hunter's capacity to exploit the earth's resources most congenial to the historic task of depriving him of the same.
posted by feral_goldfish at 5:34 PM on December 20, 2014 [1 favorite]

I was coming in to mention the eminent anthropologist Marshall Sahlins' "The Original Affluent Society," which feral_goldfish is (I believe) referencing above. Sahlins wrote this >40 years ago, gathering various ethnographic data about nomadic hunter gathering societies to describe a way of life in which, in fact, material needs are very much finite (you don't want a lot of stuff when you are nomadic) and in which affluence is based on having just enough to meet those basic material needs, leaving lots of time for leisure and relationships. He was writing against prevailing ideas that hunter gatherers lived miserable, "poor" lives -- and in keeping with the anti-materialist, Western countercultural zeitgeist of the times. He called this the "Zen road to affluence." You can find this essay in his collection Stone Age Economics.
posted by third rail at 8:15 PM on December 20, 2014 [1 favorite]

The St. Petersburg Paradox can be viewed as a paradox of unbounded wants. There are some discussions in economics literature.
posted by grobstein at 2:54 PM on April 24, 2015