Discussing prudence, St. Thomas Aquinas quotes St. Isidore of Seville, “A prudent man is one who sees as it were from afar, for his sight is keen, and he foresees the event of uncertainties.” Economics is the modern term for this ancient prudence, for the principles of economics allow us to foretell the likely consequences of an action, event, or law and then decide whether the prior action is desirable. Prudence, then, is our goal in such a class. This intellectual virtue empowers moral virtue to fulfill its ends.
When I was a kid, I had no interest in economics or money (except that one could use it to get things). I thought econ was for people obsessed with superficial stuff. By the time I was in high school, I had renounced superficial stuff and was trying to attain whatever high school me thought was wisdom, which turned out to be an exclusive focus on literature, poetry, and religion.
I was converted into an interest in economics when I learned about how incentives influence people’s behavior, and that people’s seemingly bad actions are more often unfortunate economic effects rather than deliberate maliciousness. People do what they think is good for themselves and those they care about by following incentives. In short, I learned not to jump to blaming individuals for the way things are and instead to think through what dynamics made things become the way they are. This study, just as the literature I love, reveals much about the tragedy of the human condition.
An economist as an economist studies how these games of exchange and choice work and how changes in the rules or environment will change behaviors of the players in the game. The ideal economist can foretell the effects of different actions, events, or laws with a high probability of being right.
The Armenian economist Alchian wrote, “What the economist can do with economic analysis is to deduce some of the consequences of a proposed act, presumably more accurately than a noneconomist. But to assess and appraise whether the consequences of the action are good or bad is, to the economist, forbidden fruit. Yet, like Adam, many economists eat of it.”
I have greatly enjoyed Alchian’s beautiful book Universal Economics from which I took this quotation, but no one is only an economist, and as sons and daughters of Adam, we need to learn how to appraise the likely consequences of an action AND judge whether the consequences are good or bad, for distinguishing good from evil is the most important thing for living a good life. I don’t know to what extent prudence can be taught, but I do know that the study of probability and economics lays the groundwork for wise decision making in personal, business, and political life.
If a classical education wishes to carry the torch of those liberal arts, which liberate people to know what is true and do what is good, then, strange as it may sound, the principles of economics and probability is not optional.