Scarcely Economics

The cliche goes that the flapping of a butterfly wing in Asia just might be the movement of air of that triggers a hurricane in the Gulf of Mexico. The math of that cliche is relatively developed, but it's mainly a computer simulation situation, actually showing the effect of those flaps is a beyond our sensors...

Somewhere on the edge of academia circulates the idea that economics is defined as the "study of how human beings allocate scarce resources". It's a definition that doesn't show up in most dictionaries, but it has a stubborn persistence. Scarce resources are of course an important component to economics, but is it really all there is? Most definitions instead fall rather close to Webster's: "a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services."

It's a curious distortion to make economics strictly a study of scarcity, and like the textbook chaos theory case it starts out as a rather minor disruption. Scarcity is after all essential to the generation of price and value, and economists hold those processes dear to their hearts. There is of course more to economics than just studying scarcity, but it's not exactly an alien concept. What's curious is what happens when non economists start latching onto the distortion, what's curious is when scarcity meets attention from three different directions.

Michael Goldhaber, Richard Lanham and Georg Franck, all more or less independently converged on a phrase, "the economics of attention" in the past decade or so. At the core of their thought (which varies widely in quality) is the observation that in a time where information is becoming, in Goldhaber's terms, "superabundant" what is scarce is attention. It's an interesting observation, one well worthy of economic exploration, but oddly enough Goldhaber, Lanham, and, from what I can tell without reading German, Franck as well all want to go much further. They pull back and wheel up with their distorted version of economics as being solely the study of scarce resources. It's a funny equation, an interesting observation plus a distorted definition equals a call for a whole new construction of economics.

The first irony is that if economics was really just to be about the distribution of scarce resources it wouldn't even be about money. For money is about as far from a scarce resource as there is. It can be printed out by any government and by a skilled counterfeiter too. Or it can be generated by any group or organization with enough clout. Airlines for instance have essentially created their own currencies of frequent flier miles, while towns like Ithaca, New York have created their own regional currencies with little more than a printing press and a PR campaign. Of course in this digital age a printing press is way to heavy, banks of course can famously create money by lending out money that people deposit for savings and in the twenty first century this operation has been extended into financial maneuvers of baroque complexity that span the globe in seconds. Money is anything but scarce. The problem is not there is not enough, but that it circulates with a damaging inequality.

Goldhaber and Lanham though don't seem really want economics to be about money anyways though. They'd much rather refocus it all around attention. It's an act of overstatement that probably does them far more harm than good. They get to make exaggerated statements about the need for a new economics, perhaps it makes their observations seem bigger, but it also makes it far easier to ignore them. They might want it all to be about attention, but quality and accuracy still have a bit of value left in them. Someone is going to make a career pulling attention scarcity into the wider economic stream of thought, but it just wont have the extreme ramifications the attention lovers vest into it. Goldhaber's work in particular is still worth of future attention, but until he pays a bit more attention to what economics actually is his insights will probably remain obscure to the discipline...