ECONOMIC NATURALISM: Gaining Insights from Everyday Observations


Economic naturalism is a powerful concept that allows individuals to view everyday observations through the lens of economics. Similar to how biologists observe and marvel at the intricate details of nature, economic naturalists seek to understand the hidden economic principles that shape human behavior and decision-making.

This article explores the concept of economic naturalism and how it can provide valuable insights into various aspects of our lives. We will delve into several real-life examples to demonstrate the practical application of economic principles and their impact on diverse scenarios.

Economic Naturalism in Action

Economic Naturalist 1.1: Bundling “Free” Software with Computers

Have you ever wondered why hardware manufacturers often include more than $1,000 worth of “free” software with a computer selling for only slightly more than that? The answer lies in the unique nature of the software industry, where product compatibility plays a crucial role. Customers prefer using the same software programs as their peers to facilitate collaboration and ease of communication.

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Recognizing this, software developers strategically offer free copies of popular software, creating network effects. The benefit of owning a software program increases with the number of users, making the most popular programs dominant in the market. By bundling free software with computers, manufacturers enhance the appeal of their products, promoting the adoption of specific software as a standard. This strategy has been successfully employed by companies like Intuit Corp., which offered free copies of Quicken, leading to its widespread use as the standard personal financial-management software.

Economic Naturalist 1.2: The Case of Heaters in Cars

Why do auto manufacturers include heaters in virtually every car sold in the United States today? The answer lies in cost dynamics and consumer demand. While heaters may not be needed in all regions, they are inexpensive to manufacture and useful in most parts of the country during colder months.

As people’s incomes grew over time, the demand for cars without heaters diminished, making it cost-effective for manufacturers to equip all cars with heaters rather than offering them as options. On the other hand, features like satellite navigation systems cater to high-income buyers who are willing to pay a premium for such amenities. Manufacturers optimize production by offering features that appeal to the majority of their target market, ensuring cost efficiency and maximized consumer satisfaction.

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Economic Naturalist 1.3: Braille Dots on Drive-Up ATM Keypads

The presence of Braille dots on drive-up automated teller machines (ATMs) may initially seem puzzling. After all, blind individuals cannot operate vehicles, so why include Braille dots in drive-up locations?

The reason lies in manufacturing cost and efficiency. Once the keypad molds are manufactured, adding Braille dots does not significantly increase the production cost. Producing separate keypads with and without Braille dots would require additional molds and inventory management. Since the Braille dots do not hinder sighted users, it is more cost-effective to produce keypads with dots universally. This practice ensures inclusivity and convenience for visually impaired individuals, aligning with societal values.

Embracing Economic Naturalism

By adopting economic naturalism, individuals can unlock a deeper understanding of the economic forces that shape our world. It enables us to observe and appreciate the intricate details of human behavior, decision-making, and market dynamics. Just as biologists explore the wonders of nature, economic naturalists explore the complexities of economics in everyday life.

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Performing cost-benefit analysis, recognizing opportunity costs, and understanding economic surplus empower us to make informed decisions in personal and professional spheres. Economic naturalism allows us to make sense of observations, identify patterns, and gain insights into the underlying mechanisms that govern our choices.


Economic naturalism is a powerful tool that helps us make sense of the economic intricacies of the world around us. By applying economic principles to real-life scenarios, we can comprehend the motives behind decisions, the driving forces behind markets, and the impact of individual choices on society as a whole.

Incorporating economic naturalism into our everyday thinking transforms us into astute observers of economic behavior. We become more discerning decision-makers, capable of optimizing choices to maximize benefits and minimize costs.

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