Folk Economics

Paul Rubin

Southern Economic Journal, 2003, vol. 70, issue 1, 157-171

Abstract: Folk economics is the intuitive economics of untrained people. It is concerned with distribution, and does not allow for or understand incentives. Folk economic notions evolved in our ancestors m circumstances where there was little in the way of specialization, division of labor, capital investment, or economic growth. It can explain the beliefs of naïve individuals regarding matters such as international trade, labor economics, law and economics, and industrial organization. It is important that voters understand economic principles. Economists would do a better job of persuading others and of teaching if we paid explicit attention to folk economics. Because untrained individuals do not fully understand gains from trade, training in economics is likely to improve welfare by increasing the number of trading opportunities. There is evidence that this is m fact true.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:70:y:2003:i:1:p:157-171

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