How To Break Anything

Thoughts and insights on culture and human behavior, living blissfully at the intersection of rationality and irrationality (but mostly irrationality) 
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Economics is about value, not about money

It's generally assumed that economics is about money, which is incorrect. Economics is about value; it just happens that sometimes money is valuable. This is why behavioral economics has little to do traditional financial dynamics with and more to do with traditional social/psychological dynamics.

I was talking not too long ago about how it tends to be frustrating to get dollar coins back from change machines.

You'd think a dollar coin would be just as valuable as a dollar bill, but it's not. This is because it's easier to lose small metal coins. I was telling my friend that I'd gladly change my dollar coins for bills instead, were I able to find someone who'd find the exchange of equal value (not bloody likely).

Economics is about value (irrational), not strict numerical comparison (rational).

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Comments (1)

Feb 13, 2010
Caleb Kramer said...
interesting to think about. economics in the purest sense is definitely value, and exchange of it. most of the time when people are talking economics, it happens to be financial because we are using money to symbolize value. when governments get involved in trying to control value it gets complicated, http://en.wikipedia.org/wiki/Foreign_exchange_market

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