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Noneconomic Values

By Timothy D. Terrell
September 16, 2002

September 16, 2002

Because we humans are beings with limited capabilities, living in a world with finite resources, we are confronted with scarcity every day. Scarcity means we have to make choices — if we can't have the new computer and the beach vacation, we have to pick one. Yet people will make every attempt to evade the idea that every human act is in some sense economic — it involves a tradeoff.

It is relatively easy to see this truth for what we normally think of as goods or services. As economists are famous for saying, even a "free" lunch is not truly free, for the resources used to produce the lunch could have been used for some other purpose. Something had to be foregone in order for the lunch to be provided. (The lunch is not even free to the person receiving the food, as long as it takes time to eat.) What is more difficult is to see that economics extends even to decisions about intangibles — even moral decisions.

A Christian business owner might decide to close down on Sundays to respect the Fourth Commandment. Suppose this requires a reduction of profits (which is, of course, not necessarily the case). Strictly speaking, this is not a sacrifice of economic gain for noneconomic gain. It is a tradeoff between the goal of achieving material wealth and the goal of achieving a heavenly reward. The tradeoff is no less economic because the gain in mind is not material.

Someone might object, "You can't put a price on _______." The blank could be filled with all kinds of intangibles — such as life, health, freedom, or morality. The complaint might result from an objection to treating these intangibles as though they had some value that could be compared to ordinary objects with price tags. Can one truly measure the value of a human life? Or assess the value of righteousness?

Yet the situation is not all that different from the problem of valuing marketable commodities. We are equally incapable of measuring the value of a new computer, or a beach vacation, or a lunch. As the better economists have been pointing out for centuries, value does not reside in physical objects, but is subjective. It varies from person to person, and only the individual really knows the intensity of his own desire for something. The only thing a price tells us is that the buyer values the thing at no less than that amount, and the seller values the thing at no more than that amount.

Most likely, the valuations of buyer and seller are quite different — that is why trade takes place at all. I might be able to trade my new home computer for a week at a friend's beachfront condominium because my friend and I have differing values. I can make do with my office computer, while my friend has no computer at all. At the same time, I haven't been to the beach in years, while my friend has been living in the condo all summer and is ready for a change. In the exchange, both of us give up something we value less highly for something we value more highly.

As with our Fourth Commandment-observing Christian business owner, the tradeoff need not be made in a market to be economic. There is no market for "heavenly reward," but the tradeoff is still economic. Economics has historically been used more often to examine market transactions because the trade produces an observable price, but as a study of human action it is not excluded from investigations of how an individual makes personal trade-offs.

This means that anywhere people are making rational tradeoffs among things they value, their values are in some sense economic. This is an uncomfortable reality for those who would prefer to dismiss economics as irrelevant, or subservient, to "higher values." As Thomas Sowell once pointed out:

There are, of course, noneconomic values. Indeed, there are only noneconomic values. Economics is not a value itself but merely a method of trading off one value against another. If statements about "noneconomic values" (or, more specifically, "social values" or "human values") are meant to deny the inherent reality of trade-offs, or to exempt some particular value from the trade-off process, then such propositions need to be made explicit and confronted.

Often, when "economic values" are contrasted with other values, it is an effort to escape the market pricing that is an indispensable part of any economy. For of course, values so lofty as to merit the term "social" or "cultural" must trump anything as materialistic as economic values. And, while the term "economic" brings to mind individuals making voluntary exchanges based on their own personal tradeoffs among values, words like "social" or "cultural" sound more compatible with majoritarian democracy. Any "social" or "cultural" choice would seem to require the participation of a larger group, say, the state.

For example, in a document on sustainable development by the 1996 Presbyterian Church (USA) General Assembly, the writers ask, "What values are important to sustain for the future, and for whom should they be sustained? Should economic or cultural or ecological values be emphasized when it comes time to choose between conflicting values?" (What is this choice between conflicting values, we might ask, if not an economic choice?) Several paragraphs later, the authors discuss "full human development," which entails "not only improved economic standards of living but also the full complement of social, political, cultural, and transcendental values and rights, and with an emphasis on quality, not quantity." Apparently, "economic standards of living" refers to that seedy individualist consumerism we've been warned about. How could we, in good conscience, prefer these materialistic "economic" values to something as vaguely noble as "transcendental values"?

Obviously, any legal protections pertaining to individual property or the freedom to make market transactions will need to be curtailed in favor of these higher values. We are to understand that mere economics, with its worldly obsession with private property, cannot possibly take into account what is truly great and just and right in society. Perhaps that is why, in the three page listing of "human rights" that follows this discussion of values, there are several attacks on private property, and no mention of any freedom of contract. To have individual decision makers making exchanges freely in a market setting is, to these writers, an abhorrent way of making decisions. The alternative is usually (as it is in this case) to have the decisions made by a centralized civil government. In this utopia, leaders in government who are in possession of the "right" values should decide how resources should be allocated.

When "economic values" are pitted against "social values" or the like, loss of liberty is not far behind. Trading away personal freedom to gain an ungodly concentration of power in the hands of the state — that is an economic tradeoff of intangibles that I am not willing to make.


Topics: Biblical Law, Business, Economics, Education

Timothy D. Terrell

Timothy Terrell is associate professor of economics at Wofford College in Spartanburg, South Carolina. He is assistant editor of the Quarterly Journal of Austrian Economics and is an Associated Scholar with the Mises Institute.

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