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When you say the word “economics” to people today they usually think of supply, demand, and money. After teaching myself quite a bit of economics I’ve come to realize it’s actually a set of mental models, a set of tools, used to understand systems of behavior.

Adam Smith is widely credited as the father of economics, but he would not have considered himself to be an economist. He was considered in his time to be a moral philosopher. He was interested in human behavior generally, and used certain techniques to help him understand and predict behavior. Modern economists like Gary Becker and Stephen Leavitt have applied the tools of economics to areas as varied as family dynamics, or the naming of babies.

I recently stumbled upon this rather interesting podcast (see http://www.econtalk.org/archives/2006/08/the_political_e.html ), which uses a few economic tools to think about the incentive systems involved in war. One of the interesting conclusions is that dictators are far more likely to start wars than the leaders of a democracy, but once embroiled in a war dictators are far more likely to back out if things don’t go well, whereas democratically elected leaders try to double their bet and hope for the best. Understanding why this happens doesn’t require an economics degree, but an economics toolset is useful in thinking through the way the incentive systems for war work.

This entry has been filed under issues, political.