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Today’s post explores a key driver of human decision making.

We’re going to talk about an economic principle called marginalism. This is a term economists use to describe how individuals make choices when facing multiple alternatives. And it’s the subject of the third basic economic principle in our series on the biblical foundations of twelve such principles.

Principle #3: Decisions are made at the margin.

We are rarely forced to make all-or-nothing decisions. Instead, we use our time to work, eat, and sleep. We use our income to purchase a combination of housing, meals, clothing, etc.

In the book Common Sense Economics, from which this series is derived, Christian economist James Gwartney and his colleagues say this about the principle of marginalism:

Nearly all choices are made at the margin. That means that they almost always involve additions to, or subtractions from, current conditions, rather than all-or-nothing decisions. The word “additional” is a substitute for “marginal.”…We don’t make all-or-nothing decisions, such as choosing between eating or wearing clothes—dining in the nude so we can buy lots of food. Instead we choose between having a little more food at the cost of a little less clothing or a little less of something else.

The book goes on to help us understand what results from this human tendency:

When people are poor and living in impoverished countries, they devote most of their income to securing an adequate diet. They devote little time, if any, to playing golf, water skiing, or other recreational activities…But as people become wealthier they can obtain food easily…So as Americans become wealthier, they spend a smaller portion of their income on food and a larger portion of their income on recreation.

Even if we understand and agree on the definition of marginalism, what are we as Christians to think of consumption made possible by the massive affluence we experience in this country today?

  • As our income goes up, is it acceptable to play more golf?
  • Can we have filet mignon every once in a while instead of the ramen noodles that got us through college?
  • Should we go on that beach vacation each summer?

This is where we need to turn to scripture for insight. First, this entire concept of marginalism is predicated on a world of scarcity, which we have discussed before. Scarcity imposes tradeoffs on all of us.

If we look at the Old Testament, we can glean principles that help us understand how, as affluent Americans, we should think about our consumption.

Deuteronomy 14 is part of the Deuteronimic code which establishes the laws the Israelites were to live by. First, a tenth is given to the Levites for their support. Then there is a command to celebrate with a grand feast.

Here Moses tells the Israelites that every year they are to store a tenth of what their fields produce and exchange it for silver. They are then to take the silver and purchase the following, as listed in Deuteronomy 14: 22-29:

Cattle, sheep, wine or other fermented drink, or anything you wish. They you and your household shall eat there in the presence of the Lord your God and rejoice. And do not neglect the Levites living in your towns, for they have no allotment or inheritance of their own.

Moses also tells them that on every third year they are to bring a tenth of their produce (tithe) and give it to the poor (verse 29).

There is a pattern in the Old Testament that is instructive for us without making it a law for us. In other words, the principles from these words of Moses can help us understand how to live in a world of abundance.

What we can learn from this is that when we have excess, or less than we have had before, we are to be wise in how we allocate our scarce resources. There is a time and place in our priorities for both celebration and giving to those in need. Thus playing more golf as we earn more, or taking a family vacation are not in themselves sinful, but need to be evaluated within the larger context of being obedient to God’s calling in our lives.

Being a good steward means understanding how to make decisions on the margin – deciding between marginal tradeoffs while always maintaining the generous spirit of Christ.

What do you think? How can making decisions at the margin help you make wiser choices regarding the use of your time, talents, and financial resources? Leave your comments here

Dr. Anne Bradley

About Dr. Anne Bradley

Anne Bradley, Ph.D. is Vice President of Economic Initiatives at the Institute for Faith, Work & Economics. Anne received her Ph.D. in Economics from George Mason University. She is a visiting professor at Georgetown University and has previously taught at George Mason University and at Charles University in Prague. Read More...

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