The Effect of People’s Expectations

The factor of people’s expectations, left out of this discussion so far, would change the outcome somewhat.

The effect of rising expectations would be to stop the “boom” and return to “stagflationary” conditions sooner than if resource depletion alone were the depressing factor.

The mechanism whereby this would take place is described in other posts. In one way it is better for expectations to rise and have this effect because it puts a brake on the process of resource depletion with all its unhappy results. But it is said elsewhere in these posts, and will not be denied here, that rising expectations in the more perfluent countries are a major obstacle to the achievement of a steady-state or sustainable world economy, that is by deliberate policy measures rather than by default.

Rising expectations impede the steady increase in perfluence to which more perfluent people look forward, but this is also blocked by the fact of the earth’s limits. The rising expectations completely ignore these limits as if they did not exist.

If people could somehow be persuaded to recognise, understand, and take account of the fact that the earth’s wealth is limited and that there must be a limit to the increase of throughput, then they would reduce their expectations.

But this reduction of expectations would enable the economic systems to work more efficiently, putting upward pressure on the throughput rate, with a consequent acceleration of the rate of depletion of wealth. So while rising expectations impede the attainment of rising perfluence, falling expectations of perfluence temporarily make it more attainable.

Governments can’t go on fuelling expectations until economic systems seize up, nor can they allow wealth throughput to surge ahead of renewal rates until economic systems break down under intolerable stress.

In practice it is easier to let expectations rise than to educate populations about the limited nature of the earth’s resources – apparently a most difficult concept for most people to understand. So rising expectations can save resources and buy time while this arduous education process goes on and policies are developed that take account of the earth’s limits. Eventually a strong attack on expectations can begin without boosting resource depletion.

Incoming search terms:

expectations effect economics; Effects of changes in peoples inflationary expectations in macroeconomics; effects of rising peopls expectation; expectation effect in economics; peoples expectations; People’s expectations on; rising expectations and demand by the people; what is one way that people\s expectations affect demand;

Posts in this Series

2 Responses to The Effect of People’s Expectations

  1. F0ul

    This is wrong to a certain extent. People’s expectation is what drives the market to improve facilities and the way things are done. Without expectations being increased, there is no driver to change and no reason to find a more efficient way of producing products and services.

    In the short term, products may well be in short supply, but in the long term, it is expectation which drives the market to find more resources and more ‘sustainable’ supplies

    Peat, wood, coal, gas, oil, nuclear – the next step in our fuel demands is hydrogen – the most plentiful resource in the universe. It is people’s expectation which is driving us closer to this ideal resource – and there is very little a government can do to alter this course – except perhaps to slow us down through thinking that governments last for ever!

  2. Charles

    Thank you F0ul for your comment. I take the point about expectations, but hydrogen as such is not the most plentiful resource in the universe – it is the most plentiful element, but in its free form, needed for it to be a fuel, it is not a plentiful resource on Earth. The energy from other sources needed to get it into a form usable for fuel make it too expensive for most purposes and certainly not ‘pollution free’. Refer to my earlier postings on resources. It’s not just the total quantity, it’s the form and the distribution and the concentration too.

Leave a Reply

Your email address will not be published. Required fields are marked *