Wednesday, November 4, 2009

Saving lives

From Practical Economics

Quite possibly the most important, yet most difficult, lesson in economics is the idea that wealth saves lives. Although it is tough to wrap your mind around such a statement, cognitive awareness and recognition of its constructs will allow you to see the scarcity question and its solution, efficiency, in an entirely new light.

First we need to define the parameters of how lives can be saved. The higher the standard of living, the greater the quality of life, nutrition and health care; this increases the life expectancyof the population and thus lives are saved.

Second we can add a formula to the explanation. If X amount of economic growth raises the standard of living Y amount, then Z number of people are saved who would have otherwise perished as a result of the previously lower standard of living. In turn, any economic inefficiency that prevents economic growth to Y will cost Z lives. In short, economic growth creates wealth which saves lives.

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