“Potterian Economics”, 2017-01-20 (; similar):
Recent studies in psychology and neuroscience find that fictional works exert strong influence on readers and shape their opinions and worldviews. We study the Potterian economy, which we compare to economic models, to assess how Harry Potter books affect economic literacy.
We find that some principles of Potterian economics are consistent with economists’ models. Many others, however, are distorted and contain numerous inaccuracies, which contradict professional economists’ views and insights, and contribute to the general public’s biases, ignorance, and lack of understanding of economics.
…We investigate the Potterian economy by analyzing its full structure. We find that it combines ingredients from various economic models but is not fully consistent with any particular model. Some features of the Potterian economy are in line with Marxist views, while others fit the public choice perspective. Prices in the Potterian economy are rigid in the Keynesian spirit, yet Potterians enjoy full employment as in the Classical model.
We conclude that the Potterian model reflects folk economics. As such, although it is sometimes consistent with economists’ views, many of its aspects are distorted and there are numerous biases and inaccuracies, which can influence the public, particularly young readers, who figure prominently among Harry Potter readers.
In §2, we review the economic literacy literature. In §3, we discuss fiction’s influence. In §4, we describe the setting. In §5, we study money and banking. In §6, we look at the government. In §7, we discuss the law and order. In §8, we focus on monopolies. In §9, we study income distribution. In §10, we study international trade. In §11, we analyze the war economy. In §12, we study technological progress. In §13, we discuss human capital. §14 concludes.
…14. Conclusion: Many elements of the Potterian model are mutually inconsistent and contradictory. For example, it is critical of market-based systems, yet it belittles government. The government is corrupt, yet it has public support. Many mutually beneficial transactions do not take place and there are no credit markets because of prejudices, yet the books reject stereotypical images. Money is made of precious metals, yet its purchasing power has no relation to its commodity value. The wizards value education, yet they do not have universities or colleges. Moreover, the Potterian model misses many deep and fundamental aspects of economic analysis. For example, the bank does not serve as an intermediary between savers and investors, money lacks some key attributes, arbitrage opportunities are not exploited, efficiency-improving transactions go unnoticed, international trade is restricted by protectionism, there is hardly any migration, the economy is in permanent stagnation, the stock of human capital is not increasing, investments are non-existent, and taxes of any kind are absent.
Thus, a naïve reader gets a distorted view of economics, and shallow and uninformed characterizations of markets and market institutions, which surely influence and shape the general public’s understanding of economic issues. Further, they likely contribute to public’s biases, misconceptions, and more generally to their economic illiteracy. For example, public exposed to such views and sentiments might be persuaded easily by populist arguments against foreigners, against international trade, against businessmen, against bankers and other financial service providers, against authorities (eg. the central bank), etc. Folk economic interpretation of the Potterian model suggests that popular intermediaries play an important role in spreading biases and ignorance on important economic issues. Thus, rather than dismissing the “mishmash” of ideas found in the Harry Potter books, we suggest taking them seriously in order to try and understand their sources and persistence.
Some of the biases we have identified have been around for centuries. This suggests that in addition to directly influencing the public views, Harry Potter books have likely reinforced existing beliefs, which might be playing a role in transmitting the biases across through cultural transmission of values (2000, 2014). Moreover, the formation and propagation of these biases may be taking place from the period of early childhood/youth because this is the age group on which fiction’s influence is likely to be particularly strong and long-lasting.
[Keywords: economic and financial literacy, political economy, public choice, rent seeking, folk economics, Harry Potter, social organization of economic activity, literature, fiction, Potterian economy, Potterian economics, popular opinion]
View PDF: