Tuesday, December 05, 2006

Why Understanding Economics Is Hard

One theory about why learning econ can be difficult:

Fiske, a professor of anthropology at UCLA who previously taught at Penn and Bryn Mawr, has devoted decades of research to disentangling human relationships. He's studied communities all over the world, comparing cultures in West Africa with those in Europe and America.

His conclusion: Just as every human language is composed of the same grammatical elements (subjects, verbs, etc.), all relationships are built from exactly four kinds of interactions.

Fiske labels these communal sharing, equality matching, authority ranking and market pricing.

For hunter-gatherers in small bands, sharing, matching and ranking were probably as fundamental to survival as eating and breeding. But market pricing involves complex choices based on mathematical ratios.

"It's the difference between addition and subtraction on one hand, multiplication and division on the other," Fiske says.

Commerce and global trade, of course, require a finely honed version of the market-pricing model. But if humans developed this model relatively late, it might well be less than universal, even today.

(Hattip Traditional Notions)

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