Tag: Economics

Why Read?

Published on by Kieran Johnson - The Generosity GuyLeave a comment

I really enjoy reading. Over the last 15 years it has become a central part of my life and my journey.

Not every genre though, as I am sure you understand. Not everyone likes the same things. But as a I look back at the things that have really held my attention during that time, there appears to be 2 reasons why I enjoy reading something

Firstly, I read something because it will make me smarter, either in reality, or just in my perception. I really like learning about things that interest me, be that in the realm of psychology, philosophy, self-leadership and a small amount of economics*. Sometimes I genuinely increase my understanding and intellect about a topic through reading, and sometimes I just feel smarter because I finished reading a challenging book (often by Nassim Taleb), even though my general intelligence hasn’t improved.

Secondly, I read something that tells a hell of a story. I am addicted to story. Once a story loop starts in my head, I really, really want it to be closed off. But I am choosy about what I let get started, which means I don’t pick up any random novel. There is a high barrier to entry, and even then if I finish a book and the story wasn’t up to scratch, I will think unhelpful thoughts towards the author. It has to be a great story, a good one won’t cut it.

This is not just for me though. When creating for people, generally they will consume it if it makes them smarter (real or perceived) or it’s a hell of a story. Ideally it’s both.

*Honestly, I’m not sure I understand economics, or most things written by Nassim Taleb to be fair.

Why I Hate Economics

Published on by Kieran Johnson - The Generosity GuyLeave a comment

It’s more than a class that I barely passed in high school with a teacher who was as boring as a brown sweater vest. My problem with it is economists seem to think people behave rationally, without emotion. Models, legislature, and entire countries are based on that theory.

Take inflation for example. One of its main drivers is the fear that people have about inflation, who then behave in a manner that drives up inflation. Stick with me here –

The fear of rising prices causes people to buy more items now, because the price will rise in the next few weeks or months. This pushes up demand for the products, which then become more expensive because there are less products around, and scarcity creates a willingness for people to pay higher prices – causing inflation. Emotional.

Also, I have an issue with the simple construct of supply and demand. It suggests that if you can make a cheaper version of an existing product, then people will rationally buy the cheaper product, because why would you pay more money for something when you can get it cheaper elsewhere? This completely misses the connection that some have with certain brands, for which they are willing to pay more money, even though the product is the same. Emotional. We all have those traits. We all pay more money for something than we have to, because of an affiliation with a brand, or some other emotional connection.

You see, economics is filled with simple models and diagrams explaining one of the most complicated elements of our world, the market. Many are happy to rely on the market to fix all of society’s problems. As if the market is an all knowing, all powerful and altogether good being which, if left to its own devices, will take care of us all. But it is just a thing. It’s a system that we created and use for our own benefit, and hopefully the benefit of others. As with anything, it’s the users which dictate how much good or ill comes from a system. And it’s the emotions which drive the users’ decisions. So, it’s emotion which rules our market, not logic.

Or as Seth Godin puts it,

“We like to think we make complicated decisions based on rational analysis, but most of the time, we actually make an emotional decision and then invent a rational analysis to justify it.”

Mostly though, it’s the fact that there doesn’t seem to be any space for generosity within economics. It doesn’t appear to be logical, or good business, or benefit the market at all – but it is and does all those things. There just isn’t a simple diagram for it.