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If I'm not mistaken, the economic value provided by a business entity to the community is just one kind of value. We tend to put numbers to things such as stock price, revenue, profits and so on. However, there is an aspect of value that cannot necessarily be measured, such as benefits to a local community.

Is there any great loss when we don't take into account the non-economic factors? Has there been any good discussion in the literature on this?

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  • $\begingroup$ 1. "value that cannot necessarily be measured" 2. "Is there any great loss" How can we measure something that cannot be measured? I am afraid I do not understand your question. Are you asking about the welfare effects of externalities? $\endgroup$ – Giskard Jun 20 '17 at 16:18
  • $\begingroup$ @denesp: You're assuming that the loss I'm referring to is quantifiable loss. However, what I meant was more along the lines of: Is there a general discussion or argument for looking at things more holistically, at least in certain situations? Like using case studies? Surely, we can extract general principles and best practices even if we can't quantify our learning? $\endgroup$ – Joebevo Jun 21 '17 at 3:13
  • $\begingroup$ Alternately, I'm open to good arguments for why economic reductionism works well. For example, because of investment in the development of good institutions that is made possible by a society becoming more well off by allocating resources more efficiently. In particular, virtuous cycles of prosperity -- I think there's a lot here. $\endgroup$ – Joebevo Jun 21 '17 at 3:32
  • $\begingroup$ You need to provide a more specific context to this discussion. Of course there is loss when we don't take into account non-economic factors (assuming economists actually don't, which is usually not the case). But whether such a loss is "great" or "bearable" depends on what you want to analyze. As far as I know, no economic analysis has taken into account the temperature on Mars, a non-economic factor. Does this omission invalidate any of those analyses? Probably not. Currently your question is just too general. $\endgroup$ – Herr K. Jun 21 '17 at 7:58
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You are mistaken. Economics doesn't actually concern itself with measurable quantities, but rather with the behavioral functions that give rise to measurable quantities (such as price, investment, etc). The most obvious example of this is the utility function, as they are unique up to scale – meaning that there are several (actually infinitely many) which nonetheless do the same thing.

Consider the prisoner's dilemma, for instance: we might introduce for each player a scale factor which multiplies his whole payoff matrix. But no matter how we change those payoffs, so long as the structure of those matrices is preserved so will be the behavior of the prisoners. So nothing really changes. But that is fine, because what we're not interested in modelling is the value of the choices to each player, but how the players choose.

So it isn't necessary to introduce any concept of the measurable economic value of anything so long as we might say that it is preferable to something else. Which is to say that we might model the behavior of any agent without introducing a cardinal measure: we can do fine if his choices are merely ordered (this is the idea behind Revealed Preference, which was initially formulated by Paul Samuelson as an alternative to utility functions, but which was later on found to be equivalent to them).

But to answer what's bugging your mind: there isn't practically anything even mildly relevant to human life which economists won't deal with. Because in so far as people's choices are observable, they can be treated by an economic model. For instance, there's a chapter in the Handbook on the Economics of Leisure which is called The Economics of Sleep and Boredom. I've also seen a paper once on the economics of suicide (there's actually a small literature on this). Another example – though less odd and more important – is Becker's theory of crime, which takes crime out of the domain of other social sciences (which might explain it in terms of marginalization, poor education, etc) and into the domain of expected utility and choice theory (i.e. what are the odds the guy think he has of getting away given the circumstances).

Contrary to popular opinion, dealing with money and crunching numbers is often the least important and most boring part of an economist's job. Most often economists are concerned with figuring out why people would do what they do.

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Currently, the practice of economics is similar to weather broadcast: there is many technical limitations that you must overcome and choose the best tradeoff.

It is possible to put intangible value into any economic model, but it is technically impossible at the moment to simulate the time, spatial and subject changes.

IMHO, your idea of "economics values" is rather flawed. Economics itself is about human activities on trade. The term "values" is heavily diluted by the popular media and popularism association with monetary activities.

Take Charles Dickens's "A Christmas Carol" as an example, the books change modern Europe/US society values about Christmas and associate it with altruism (and also Turkey). Those are "trades" that is impossible to measures.

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