Why Do Economists Love Money?

Before I ever start of this post, I don't want to hear anyone saying, "you can't really measure [this or that]," or "you can't put a price on [whatever]." Measuring intangible things is always difficult -- an art as much as a science. No one is arguing this. This post is about explaining why we try. So don't try to pick apart my examples I know they aren't perfect. They all need a million caveats. If that is all you are after you'll miss the point. [Rant done.]

Economists are often accused of "only" caring about dollars, about money. And this is always meant in a pejoratively. I feel that this accusation needs a defense.

Guilty as charged. Kinda of...

Economists do care about dollars, in general at least, but it ought not be thought of as a bad thing. Technically, economists care about cost, not dollars. Cost includes everything; if you have a family there is a trade-off between seeing your family or working an extra hour, or paying a babysitter to go out to eat with your spouse (and whatever the date costs.) However, especially in the former case, it is difficult to measure "how much" an hour with your family is worth compared to an extra hour at work -- especially if you need the money to keep the lights on or something of the sort. But this still doesn't get to the heart of why we use dollars.

Consider the latter case, the cost of spending time with your spouse is roughly however much it costs for someone else to watch the kids, in this case, dollars work pretty well. Now try to compare the two cases, which "costs" more, spending an extra hour at work or spending extra time with your spouse? Obviously, it is difficult to compare, especially given that the standards often differ. So what's the point?

Policy still needs to be set -- that is the point. A tax rate, subsidies, and everything else economic need to be set (tax rates, subsidized farming/housing, etc.). There are three choices as to how one does one sets them; (1) whatever gets ones reelected/keep one's job/whatever, (2) ad hoc, taking a stab in the dark, maybe using intuitions or an Owigi board, or (3) using the best data one has available. Economics is about (3), that is, about providing the data for (3).

It is up to policy makers to make policy. Economists -- acting*** as economists -- serve to provide data, not to make policy; that is the job of elected officials. To date, there is no better benchmark aside from the dollar (or some other currency) to use as a constant data (e.g, a better, more consistent benchmark).

To sum it up, economists are scientists doing the best that they know how. There aren't "laws" in economics like there are in physics. Physicists have the advantage of being able to use consistent measurements such as meters or square centimeters or whatever. And these measurements are capable of staying the same across different situations. Economists lack such measurements.** They (we? I? You?) have the dollar. There is no metric system in economics.

To repeat myself, it is ok -- no, good -- that economists use the dollar (or whatever). As far we we know, there is no other way to measure the costs of something. Like the physical scientists economists exist to provide data, not policy. Only the information to make policy.

May I try to put it more clearly. The job of an economist is to analyze a situation or policy and predicate what will happen. It us up to policy-makers (the elected officials) to make the best sense of the analysis.

Mose succienty: Economists use the dollar (or some other money currency) to analyze various situations/policies. And economists as an economist *only* provide data. If am economists advocates some policy or another s/he no longer acts and economist,


*Remember the opening paragraph; an extra hour of work might be be keeping the electricity on, but that is not the point.

**Currencies don't stay stable, moreover the laws of gravity are nothing like the cost of babysitters.

***Economists suggesting and/or advocating some policy are no longer acting as economists.