Caveman Economics is a way of looking at complex economic concepts by taking them down to the simplest possible level--the solitary caveman on a deserted island. Part I explored the first principle of economics--that work is the basis of all economics, because work is required for survival, or the satisfaction of wants and needs. Before building up from the first principle, I would go a little lower and look at the requirements for work.
Returning to the Caveman Economics approach, imagine once again that you are a caveman trying to survive on a deserted island. You have to do a number of things to ensure survival, all requiring work. However, the amount of work you can do is limited by two things: energy and time.
All work requires a certain amount of energy. Without energy you cannot do work. Some tasks are more energy intensive than others. A task that requires more energy would be considered to take more work. The energy used to accomplish a task places a cost on that task. Chasing a small bush pig would take more work than picking berries. But it could also be more rewarding at the end of the day to have some meat to eat. If you only have a certain amount of energy, you have to choose what you want to use your energy to accomplish. Do you want to chase the bush pig, or do you pick berries and work on your shelter? Essentially, you decide how important a task is, and whether or not a task is worth the energy it would take to accomplish.
Time places a second value parameter on work. Each day has a certain amount of time, and in that time, there are certain things you need to accomplish, and certain things you want to accomplish. Each task takes a certain amount of time to complete, so one must decide which tasks are worth the time they take and which tasks are not worth the time they take. Going back to previous example, is the potential reward of eating a bush pig for dinner worth the extra time it takes to chase one, or are berries acceptable because they only take a few minutes to pick? Once again, one must decide whether or not the result of the task is worth the time it will take to accomplish.
Time and energy are limited resources. Thanks to their limited nature, they place a cost on any work that one performs. In order to survive, one must weigh the time and energy costs of various tasks against the importance of those tasks. The importance of a task stems from its position on the list of a person’s needs and wants, which will be the subject of the next post in this series.
Returning to the Caveman Economics approach, imagine once again that you are a caveman trying to survive on a deserted island. You have to do a number of things to ensure survival, all requiring work. However, the amount of work you can do is limited by two things: energy and time.
All work requires a certain amount of energy. Without energy you cannot do work. Some tasks are more energy intensive than others. A task that requires more energy would be considered to take more work. The energy used to accomplish a task places a cost on that task. Chasing a small bush pig would take more work than picking berries. But it could also be more rewarding at the end of the day to have some meat to eat. If you only have a certain amount of energy, you have to choose what you want to use your energy to accomplish. Do you want to chase the bush pig, or do you pick berries and work on your shelter? Essentially, you decide how important a task is, and whether or not a task is worth the energy it would take to accomplish.
Time places a second value parameter on work. Each day has a certain amount of time, and in that time, there are certain things you need to accomplish, and certain things you want to accomplish. Each task takes a certain amount of time to complete, so one must decide which tasks are worth the time they take and which tasks are not worth the time they take. Going back to previous example, is the potential reward of eating a bush pig for dinner worth the extra time it takes to chase one, or are berries acceptable because they only take a few minutes to pick? Once again, one must decide whether or not the result of the task is worth the time it will take to accomplish.
Time and energy are limited resources. Thanks to their limited nature, they place a cost on any work that one performs. In order to survive, one must weigh the time and energy costs of various tasks against the importance of those tasks. The importance of a task stems from its position on the list of a person’s needs and wants, which will be the subject of the next post in this series.
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