By the time a student of economics enters the university, he already knows everything, more or less, about this field of study. He knows that the market revolves around self-interest "and if there is anything he, or anyone, clearly understands, it is this very thing. As everyone's favorite French visitor wrote, "No vice of the human heart is so acceptable to it as selfishness."" In other words, it comes natural "economics is common sense. However, one thing a student may be surprised to discover is that this is not entirely true. Economics is common sense based on many, many assumptions. .
As Adam Smith noted, the actions of private individuals pursuing their own self-interest frequently leads to public benefit only under several qualifications: among which is the precondition of personal and institutional civic ethics, along with the assumptions of an absence of spillover effects (externalities) and the presence of well-informed buyers and sellers. Despite the necessity of these often-unrealistic assumptions, the Invisible Hand' has worked exceedingly well in the market of business and monetary transactions. However, this market is not an isolated animal, and decisions made there affect, or spillover into, virtually all aspects of public and private life. Moreover, in many of these other markets' of life, externalities abound and those who make the transactions are rarely well-enough informed, if for no other reason than the fact that good and bad are much less easily defined "the right decision may not necessarily be the one that maximizes profit and production. In these instances, popular economics and self-interest are simply incapable of determining the best course of action. I will argue that, in recent decades, market forces have adversely affected two particularly important aspects of life "civic engagement and the family. Ultimately, I hope to show that this adverse affect stems from an oversight of crucial spillover costs and benefits, without the consideration of which well-informed decisions cannot be made.
