Elisabeth Tamedly (Lenches), author of this wonderful treatise that we just posted, also contributed an interesting piece found here. She writes:
Church leaders often call on their flocks to live a life of service to God “regardless of cost.” This exhortation flies straight in the face of economic thinking — and reality. Believers, to be sure, fully intend to live up to this ideal while in church, as reflected by their hymns and prayers. But their everyday behavior tells a different story. The connection between these two life spheres is often tenuous and sometimes non-existent. No wonder hypocrisy is the accusation most often leveled against Christians. Economists point to the inevitability of this conflict between idealism and reality, but they also offer ways to bridge the chasm between them.
We live in a world in which our wants are greater than the available resources (land, labor, factories, etc.) to satisfy them. Economists call this fact “scarcity.” Our plight B the “human condition” — forces us to cope with scarcity as best as we can, i.e. to “economize”. This means that we are faced with alternatives and must constantly choose between them. We tend to choose the options that bring us the greatest satisfaction. The value of the next best alternatives that we have to give up represents the costs that we incur whenever we make a decision. Economists refer to them as “opportunity costs.” So every choice involves a comparison between benefits and costs. Our wants may be material (buying a car) or immaterial (helping the homeless); what counts is that their fulfillment requires scarce resources that have alternative uses. Economists study how we make these unavoidable trade-offs.
Nations as well as individuals are plagued by scarcity. When a country wishes to increase its means of production, it can do so only by diverting resources that could otherwise be used to satisfy its citizens’ everyday wants (consumption). Developing countries, for example, can build up their capital stock only by channeling resources away from an already low level of consumption. This is why poor nations seem to become even poorer before they can begin to enjoy the fruits of economic development.
We as individuals experience scarcity by not having enough time and money. When we go to a movie, the dust on our furniture remains undisturbed; when we take that dream vacation, we must do without the home video system we also crave. We just can’t “have it all.” So we are forced to make choices and incur unavoidable costs. Economists view a “rational” choice as one for which the expected benefits to the decision maker are greater than the expected costs. There are no objective costs — and benefits, for that matter. Both depend on our valuations. Even if costs can be expressed in monetary terms, such as prices, the true cost to us is the value of what we sacrificed by spending our money — or time — one way rather than another. Both suppliers and consumers respond predictably to changes in benefits and costs. This predictability is the basis of the law of supply and demand.
Human conduct is therefore an incessant sequence of choices: big choices and small choices, conscious and unconscious ones. The way we choose is, to repeat, determined by our valuations, not by some absolute, calculable standard. It may come as a surprise to learn that economics is about people’s valuations, not about physical quantities.
What, then, determines our valuations? One thing and one thing only: our “self interest.” At this point some believers may want to part company with economists. Isn’t the Bible teaching precisely the opposite: to disregard our self-interest in the service of God? How, then, can a committed Christian like myself also be an economist?
That’s because economic science, the study of self-interested choices in an environment of scarcity, accurately describes and predicts the broad outcomes in all human spheres, including religious ones. Churches, after all, require their members to contribute money and time, which have alternative uses and are therefore scarce. They can thus be provided only at a cost, which limits the amount of both that believers are willing and able to “supply.” When Christians refuse to think in the “unholy” terms of the economist, they pay a high price, because they are giving up a proven, indeed the only proven, method of understanding and explaining human behavior. What gives?
We need to specify the meaning of “self interest.” Much confusion is caused by debates in which key words are left undefined, especially when everyone “knows” what they mean. Isn’t self-interest synonymous with selfishness and greed? Doesn’t it follow (just think about all the folks who regularly donate to charities!) that the economists’ contention that human behavior is guided by selfishness and greed cannot be generally valid?
No, it does not, when we use a broader and more realistic definition. Our self-interest is ultimately governed by the goals (both short-term and long-term) that we have set ourselves and the projects that we wish to accomplish to reach these goals. But how are these goals and projects determined? For answers to this important question, we must look beyond the realm of supply and demand and consider such factors as the families individuals grew up in, as well as their cultural, moral, and religious backgrounds. Many of us are, indeed, consumed by the goal of making it in this world; but others are motivated by compassion for their fellow humans (and even animals) and are thus willing to use their resources to alleviate their suffering (Mother Theresa). We are all at different points on the continuum between these extremes. Our self-interest is a mixture of selfishness and the willingness to share our resources with others, a mixture that is changing and evolving.
When the Bible admonishes us to accumulate treasures in heaven, it does not negate our self-interest. In fact it appeals to it by promising us future rewards. In the here and now, Christian life is a process in which we are asked to continuously re-evaluate our self-interest; to keep nudging our goals toward becoming more loving and compassionate, to attach an ever greater value to giving and sharing and an ever smaller value to what we have to sacrifice. However, we cannot abolish scarcity and therefore costs. They will continue to limit our ability and willingness to live a life in the service of God.
Only if we accept this reality as God-given, only if we integrate its constraints into our daily lives, will we be able to experience the joy of our Christian faith and avoid the charge of hypocrisy. Because the ultimate truth for a believer — and the one which connects biblical with economic thinking — is the insight that living in accordance with the teachings of Christ is in our long-term self-interest.
Elisabeth Tamedly Lenches, Ph.D. San Marino, California, June 2003
