Editor’s note: This has been excerpted with permission from the Pacific Research Institute. To read the entire post, click here.
The well-worn stereotypes of urban sophisticates versus country bumpkins took a hit in July when an up-and-coming French economist explained her latest findings in The Economist, a publication with more than 1.2 million subscribers globally and significant influence with policymakers in the English-speaking world.
“Some groups are more likely than others to see the world in zero-sum terms,” wrote Stefanie Stantcheva, founder of Harvard’s Social Economics Lab and this year’s recipient of the John Bates Clark Medal, in one of the magazine’s prestigious “By Invitation” essays.
Then came the macroeconomic equivalent of a dubstep drop. “People in cities, for example, tend to think this way more than those in rural areas,” Stantcheva wrote, chalking some of this up to “intense competition for housing and jobs.”
The Harvard economist also found that some education can help, but it can hurt even more. “People with more formal education are less likely to see the world as zero-sum,” she wrote, “but the pattern flips among the highly educated: those with PhDs often show the strongest zero-sum beliefs.”
Her research also found that the younger generations who populate American cities in greater numbers than their forebears “are much more zero-sum than older ones.”
If you are not an economist or at least an econ geek, you may wonder what all the fuss is about, so I’ll clue you in on some jargon: “zero-sum” is practically a swear word among economists. (It wouldn’t surprise me if some economist somewhere bashed his shin and exclaimed, “zero-sum it!”) They regard it as a stupid game that only very foolish people would play. So what, exactly, is it?
“A zero sum game is a situation where losses incurred by a player in a transaction result in an equal increase in gains of the opposing player,” the Corporate Finance Institute’s guide explains. “It is named this way because the net effect after gains and losses on both sides equals zero.”
In other words, resources are a fixed pie chart for zero-sum thinkers. The game then becomes how to slice that pie, who gets what and who misses out. This kind of thinking is, almost by definition among economists, considered backward thinking. And it has now been found to be most prevalent in folks who would look down from their ivory towers on those hicks in the sticks.
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