"The parable of the broken window was created by Frédéric Bastiat in his 1850 essay That Which is Seen and That Which is Not Seen to illuminate the notion of hidden costs (a.k.a. opportunity costs).Here's an interesting article on a little gem from economics, aka opportunity cost. I find my economic though experiments (such as this parable) to be highly educational and valuable tools for understanding "how things work".
Bastiat uses this story to introduce a concept he calls the broken window fallacy, which is related to the law of unintended consequences, in that both involve an incomplete accounting for the consequences of an action."
Thursday, April 20, 2006
Parable of the broken window