An economics lesson for skeptics

A year and a half ago I fell off my weekly podcast schedule and got behind on Skeptics Guide to the Universe. Partially because I got behind on jogging and stopped playing World of Warcraft - two activities I would do while I listened - and partially because I started listening to Econtalk and wanted to get caught up on that podcast. I am now within striking distance of being caught up with both of them and mixing them in together has got me thinking a lot about economics within skepticism, and how often they overlap.

Economics is a strange beast to most skeptics - they think it's about money when its really about making the most with limited resources. Most people see a demand curve stretched over a Cartesian coordinate plane and shut down. However, someone like me who's got econ fever doesn't see numbers and percentages - we see people and their wants and needs and how they shape their actions. The degrees of comfort and hardship are what it's all about - not abstract figures.

But most science nerds miss this field. Take for example a Skeptics Guide episode I listened to the other week. There was a long discussion about how ineffective sunscreen can be because people slathered with it spend more time outside because they think it will protect them. The discussion was very interesting to hear, but the panel was unaware that they were discussing a well-known economic concept - the moral hazard, where people insulated from risk will behave in a riskier manner, and in some cases they will be harmed more than if no safety measure was put in place.

Brandying about the term would make it easier to find other examples, such as seat belts, airbags and other automobile safety devices which encourage fast driving. The concept is common enough to inspire the name of econ-country crooner "Merle Hazard."

Here's another important one - opportunity cost. As skeptics we understand that homeopathy is a placebo medicine - it doesn't directly harm the health of the treated, it's merely water, but it keeps people from seeking real medical advice. To put it another way, the opportunity cost of getting homeopathy is all the real treatment one could be getting at the same time.

Economic concepts really belong in a skeptics toolbox, as risk and reward are important issues in skepticism.