How Does it Matter?

Abstract

Making economic policy typically requires positive as well as ethical judgments. Any kind of public policy inevitably involves fundamental presumptions that classify some aspects of human experience as desirable and others not, and that value some of these desirables more highly than others. (It is no accident that “policy” has the same root as “politics.”) At the same time, if the actions taken are to be at all effective in promoting the ends sought, they must reflect a not wholly inaccurate perception of how they relate to the aspects of experience they are supposed to influence. In the case of economics, an essentially behavioral field of inquiry, the central question for policy purposes is how (if at all) individuals and institutions will alter the conduct of their affairs in response to any of the vast variety of changes that economic policy can bring about in the environments they face.