Metaeconomics Bridges the Gap

Empathy --- Not Just Ego --- Matters... as Adam Smith made clear:

(every human must) humble the arrogance of …  self-love, and bring it down to something which (the) other … can go along with (Smith 1759/1790, loc 1714-1727).

Interpreted: Humble the arrogance of eg0-based self-interest (the Incentive) and bring it down to what an empathy-based shared other-interest (the Ethic) can go along with.

Metaeconomics Bridges the Gap is offered in the spirit of the Dummies series of books, which assume little prior knowledge of the technical side --- the framework and theory --- of economics. It is offered to help make better sense of the Metaeconomics Blog. One especially relevant book in the Dummies series is Behavioral Economics For Dummies by Altman (2012). The Altman book is a great place to gain familiarity with the empirical science underlying Metaeconomics: Tempering Excessive Greed (Lynne, 2020), and the Metaeconomics on the www.metaeconomics.info website. Lynne (2020) along with the journal papers published along the way to the book (see the vitae in the About section) give the analytical system used in the Blog.

Also, perhaps most importantly Metaeconomics serves to bridge the gap between the empirical reality coming out of Behavioral Economic Science with the standard Microeconomics model, which has ever more become an ideology, based in a kind of cargo-cult science (Lynne 2025) of make-believe. For the latter, see Microeconomics For Dummies by  Pepall et al (2016) and the Microeconomics represented in Parts 1-3 of Economics For Dummies by Flynn (2024).  Metaeconomics uses similar analytical machinery to what is used in Microeconomics (e.g., indifference and isoquant curves, demand and supply curves), but the use is based in empirical science.

Several of my readers have commented that the Blog is just too complex, “…with path OG compared to path OM, and bliss on path 0Z.” I can empathize --- at least try to walk-in-your-shoes, which is what Metaconomics is all about --- so, here goes.

Economics Started Out as an Explanation of Household Behavior

The Greek root of the word "economics" points to it being about the decisions within a household. So, we start there. Let us say that you and your significant other are considering enjoying some bread and wine during a happy hour tomorrow afternoon.

So, how does a mainstream Microeconomist, the Econ --- what you learn in Econ 101 taught by the Econ! --- make sense of such behavior? Well, an Econ represents the situation, has the curves dancing around inside the head, just naturally, for each person in Figure 1: Each person has their own Figure 1, their own "indifference structure." Each person is deemed to be completely indifferent as between the amounts of bread and wine on any one of these curves, getting the same amount of satisfaction --- equal payoff in happiness, we might say --- at any point on a particular curve, so it is called an indifference curve. And, said person is totally not paying attention to the other person who will also be eating and drinking, during that "happy" hour event.

It is hard to imagine how such a person, the Econ can be happy, ignoring everyone else in the happy hour. As Deirdre McCloskey describes in the new Humanomics, such behavior is Profane (for an overview see Lynne 2025).  A MetaEcon, in contrast, sees Humans who are paying attention to the other, which is the only way to have a truly happy hour, bringing the Sacred arising from sharing the happy hour with someone else.

Economics Sees Econs Not Humans

The ego-based pursuit of self-interest only (Adam Smith called it arrogance) Econ claims we each do our own thing without empathy-with the other, without ethical reflection: It is indeed Profane. It is only about the self, about the arrogance of self-love, about the self-interest only. It does not matter if the other goes along with it or not: It is all about the selfish-self!  Enjoy your isolated, arrogant happy hour … which is Profane?

So, what determines which point is chosen by each self? The Econ claims what drives the choice is only the relative price of the two goods, represented in the slope of the income line, the budget allocated for bread and wine, the YoYo (no pun intended: Can't get the Wix editor to make a superscript!) in the figure. So, one eats a bit more bread when the wine is expensive: If the price ratio changes, like the wine price increasing relative to a stable bread price, that line twists down, pivoting on the top point, so one drinks even less wine.

If the wine price decreases for that favorite wine, that income line twists up, again pivoting on the top point, so one drinks a bit more wine relative to bread. And, if income goes up (or the budget for wine and bread is increased), the line shifts up, and you eat and drink both more bread and more wine. If income goes down (or one reduces the budget for bread and wine during happy hours), it shifts down, and you eat and drink less wine and bread. Simple.

Econ is Just as Happy at Every Point on the Indifference Curve

So, the key point is, to an Econ: You are just as happy at any point on a particular indifference curve, until you look at relative prices. The relative payoff at each point is different, so you choose the one that best matches the relative prices --- it works for you "economically." The relative prices vs relative payoff at each point locates the path 0G. You move up that path 0G to ever higher payoffs --- higher indifference curves --- until you have spent your budget, spending the budget at that efficient point A. There is no other point in the Figure 1 space that can make you happier, although it is Profane.

Another important idea is illustrated in Figure 2, that of the demand curve, which is derived from Figure 1 choices. One would just twist this income line up and down for different prices of wine to plot a demand curve for wine, as in Figure 2: You know the old story, people will buy more wine as the price drops, so the demand curve slopes down. Also, if income --- or, the budget for bread and wine --- increases, the demand curve will shift out. All of this movement comes from Figure 1, along that self-interest path, showing how the consumer gains from consuming bread and wine.

Also, even more importantly: Introducing the Sacred, as in the payoff from jointly sharing the happy hour with a significant other, can also shift the Demand curve to higher level.  The payoff is higher, so one wishes to buy more of both bread & wine, now jointly producing payoffs in both domains.

Supply Curves Show That It Always Costs More to Produce More

Also, the supply curve illustrated in Figure 2 slopes up: It is ever more expensive to provide more wine to the market. The market clears at a point where the supply and demand cross, for price P and quantity of wine W. This is the most famous figure from economics, the "scissors" of supply and demand, and, also perhaps the most useful economic idea ever drawn into a figure.

You now have the essence of what an Econ believes and teaches in Econ 101. Every person has a Figure 1 for every combination of every pair of two goods. Every person not only has a set of curves like this, but every person is also completely independent of every other person: We each merrily eat our bread, and drink a modest amount of wine (we are highly disciplined), all by our-selves (even if in the same room during happy hour!), paying attention only to our self-interest. It is like living the reality of a Pandemic sequestration by yourself all the time, Robinson Crusoe alone on the island (and, after Friday arrives, living a segregated life).

Emphasizing: The demand curve is plotted from that self-interest path. It crosses the supply curve. The price and quantity are revealed in the market, which is presumed to act efficiently. Happy times, indeed, for the Econ, completely on her or his own. Do as you please. Liberty and freedom has no other-interest tempering it.

Metaeconomics Sees Humans: Empathy Matters

Most Humans are not only Econs, but also have another side, a social side, a doing the right thing side, a moral and ethical side, a moral sentiments side, as a real --- at least a good and ethical one! --- Human does so have (confirmed in empirical Behavioral Economic science, again see Altman, 2012). Happy hour would likely have two people like that, two Humans, as even considering meeting tomorrow afternoon is about looking to the possibility of being happy through sharing something, at least a bit of something. MetaEcon 101 would account for the Human, not just the Econ. And, it is not new news: As the quote of Adam Smith at the top, writing in the 1700s, points  out: Humans must humble the arrogance of self-interest (ego-based Incentive) and bring it down to what the other-interest shared with other Humans (empathy-based Ethic) is reasonable. 

MetaEcon 101 would point to the fact that each person, especially one who likes happy hours might be quite social. Said person is at least somewhat community oriented, and is a person who might enjoy a shared payoff from drinking wine with friends, especially with the significant other, tomorrow afternoon. Also, said friends --- the significant other especially--- might also feel said way, so both have lots of overlap in the other (shared among the friends, but yet internalized within the own-self)-interest. Said people get along, doing at least some things everyone can go along with, perhaps even go shopping, together, today to pick out the favorite wine for tomorrow.. Such a social and community oriented person is illustrated in Figure 3. Each person has a Figure 3, too, not just a Figure 1. Every person has an other (shared with others, yet it is within our own)-interest.

Yet, just like with Figure 1, too much of anything is not a good thing.  In Figure 3, too little attention is paid to self, and too much to the significant other.

Humans Enjoy Hanging Out With the Other

The same general analysis applies, but now each person is enjoying payoff from hanging-out with others (the significant other during happy hour) on path 0M (as well as payoff in self-interest on path oG, which MetaEcon 101 clarifies is enjoyed jointly). The economic rules still apply, it is just on a different dimension of the psych --- the behavioral economic psychology of a Human is quite different from that of the Econ --- now recognizing the part that enjoys payoff from doing something that everyone can go along with. Bread eaten in the self-interest is important: Hanging out with friends, especially the significant other --- that is why we call said person significant, two people sharing an other-interest --- is also important. When the significance, the other-interest said people share fades, it is no longer happy hour!

In fact, to some Humans, said shared other-interest is the most important: Said person maximizes the other (shared, yet internalized)-interest at point C. Such a person sacrifices heavily in the domain of self-interest to serve the shared other-interest. Notice how the other-interest is still within the same person: It is internalized within the own-interest of each person, albeit shared. The shared other-interest gives payoff in joint goals, joint outcomes, like a pleasant shared sense that the happy hour worked well for everyone.

Would this be a truly happy hour? Probably not. Too much attention to the shared other-interest requires huge sacrifice in the self-interest. So, what do? How will you and yours find balance in this relationship, at least enough to have truly happy hour tomorrow?

Resolving the Balance in Self & Other-interest

The plot thickens, and becomes easily solved, with Dual Interest Theory in Metaeconomics guiding the thinking. The most fascinating feature of the new plot (and Adam Smith would approve) is that one cannot pursue one interest without the other, so we have both sets of indifference curves overlapping. We put Figure 3 on top of Figure 1 and we produce Figure 4: Aha, you say: Complexity! Humans are complex, as Figure 4 depicts --- which is reality --- as compared to the Econ in Figure 1. Each person coming to happy hour can be depicted in the abstraction that is Figure 4, each with a unique self-interest but with hopefully --- if mentally stable, and not a completely self-hedonistic-narcissistic person operating in effect on the vertical axis, and at best on a path 0G close to it --- an overlapping other-interest. For sake of discussion assume the shared other-interest is identical. So, what happens?

Well, if each ignores the shared other-interest on path 0M it is going to be an unhappy hour. If each ignores the own self-interest on path 0G it is going to be an unhappy hour. Maximizing other-interest is not satisfying, just as feeding the arrogance of self-love, the self-interest, with bread and wine while ignoring the other-interest also does not work! The only way to have a happy hour is for each to sacrifice a bit of self-interest and a bit of other-interest, moving toward the best path 0Z. It is the way to balance the joint Profane (from the arrogant self) & Sacred (from sharing with the other).

A MetaEcon also, then, puts new meaning to what it means to be altruistic. It now means sacrificing a bit in both domains of interest, which is essential in order to achieve efficiency, and happiness.  Notice how both the gains in self & other-interest are a bit less at point B as compared to the self-only at A or the other-only at C. It is the only way to achieve peace (between said people), and, yes, happiness for both people (and everyone else in attendance at the happy hour).

Humans Enjoy Bread & Wine More When Sharing the Bottle of Wine

Metaeconomics clarifies we each like our bread, but we enjoy it a lot more when we eat the bread along with a bottle of wine shared with our friends, especially the significant other, and especially if we both enjoy the same kind of wine (same shared other-interest). All the other rules still apply: We pay attention to the relative price of wine to bread, and we still have an income constraint, but we go to point B rather than point A or C. We seek the joint Profane & Sacred.

Notice, too, that wine and bread are nonallocable, which leads to the joint interest: One cannot gain only self-interest or only other-interest. Payoff to both interests arises jointly within the Human brain. Also, then, consumers are interdependent, through the other (shared with other consumers)-interest, and consumers are also interdependent with the producers of bread and wine, as well as the wine producers are interdependent with the bread producers.

As Adam Smith tried to make clear, and few listened: The market operates within the context of the jointness, nonseparability, and interdependence of everyone. It is not by benevolence we get our bread and wine, but by the attention to the interdependence which tempers the arrogance of self-interest, as represented in that which everyone can go along with, which is in the other (widely shared, and, thus ethical)-interest. The liberty and freedom to choose is tempered onto a path 0Z, a path defined by that which people can go along with. The significant other tempers your pursuit of self-interest a bit, and you temper the self-interest of the significant other, and both of you arrive at a truly happy hour on path 0Z.

Economic Efficiency Can Only Be Achieved with Good Balance in the Self & Other-interest, the Profane & Sacred, on Path 0Z

Intriguingly, economic efficiency can only be achieved on path 0Z. An Econ claims economic efficiency is achieved on the profane path 0G: Not. In fact, path OG is the path of excessive greed (Scrooge, anyone?): It is indeed profane.  Anyone on it needs to temper it with the other (again, shared with others, yet within our own-self)-interest (as the Ghosts helped Scrooge understand) in order to be happy and peaceful (and efficient) on XMas morning!

And, as Adam Smith made clear, a capitalism & democracy would crash under path 0G efficiency conditions: People needed to go along with it --- people are not much in favor of the arrogance of self-love, self(ish)-interest only, excessive greed, and it needed to be tempered --- which happened on the peace, happiness, and efficient path 0Z, not on path 0G. Smith made it clear one needed to go to the station of the impartial spectator and reflect.

By the same token, too much other-interest on path 0M is also not efficient. An aside: It is about Collectivism on path 0M and Individualism on path 0G. Neither work. Individualism & collectivism in good balance (and writ large, a free but tempered market & inclusive democracy based government) works.

Sacrifice in Each Domain is Essential to Economic Efficiency, Peace, and Happiness

To emphasize: As pointed to earlier, notice that finding a happy, peaceful (reduce political economic chaos to a minimum), and efficient outcome requires a bit of sacrifice in both domains. Every person has to give a little, not be too selfish, but also not be too selfless: To be really happy, in any hour, especially a happy hour with wine and bread, means satisfying the condition that "a Me needs a We to Be, but without a Me there is no We." "You go walking your way and I go walking mine, we meet in the middle..."

We find the satisfactory balance in the dual interest: And, when we do so, we maximize the own-interest, like Adam Smith made clear. Maximizing the own-interest --- which meant tempering the self-interest --- ensured the moral and ethical dimension (the moral sentiments) played a role in tempering the excessive greed: There it is! It takes ethical reflection to achieve happiness, peace, and economic efficiency.

Metaeconomics in Production Giving Rise to the Supply Curve

Now, in some of my Blogs I use the production version of said Figures, which serve to explain where the supply curve comes from. I replace the axis with inputs --- nonallocable inputs --- to produce joint products like joint private market & public government products, e.g. cars & roads. You would see similar appearing figures, like in Figure 5, with showing that every production process has a joint self & other-interest, joint private & public-interest: Like burn carbon fuels & manage carbon dioxide releases to the Spaceship Earth system; like produce corn & wildlife in the same field on a farm.

Figure 5 illustrates jointness in isoquants, which is also thermodynamically sound framing, as all production is embedded within the Spaceship Earth system.

The empirical testing of DIT relied heavily on looking at the best balance in industrial farming inputs including heavy use of chemicals and fertilizers, irrigation systems designed for least cost and not for saving water in contrast to more Spaceship Earth friendly inputs.  The latter might include conservation tillage, more accurate just in time application of chemicals and fertilizers,  and drip irrigation rather than black soil tillage and higher water using irrigation systems (see Lynne et al 2016; Lynne 2020, Chapter 8, for an overview of said research which went on for about 3-decades). In also such cases, profit seeking on path 0Z involved a bit of sacrifice in the max profit on path 0G.  The two outputs would be something like profane F corn and sacred S wildlife in the cornfield, or sacred S higher water quality going downstream to other users.

The profane F corn supply curve will lie higher in the space of Figure 2 (replace wine with corn) when tempered by the shared other-interest in fewer downstream effects from the application of chemicals and fertilizers. It would also lie higher in the space from allowing the shared other-interest in wildlife to influence how the fields are managed. Efficiency considering the Sacred S shared other-interest on path 0Z is different from the efficiency from pursuing only the Profane F self-interest on path 0G.

Pushpins and Poetry

Before we go, one other matter:  price P is not value O. That is price $P of pushpins is not measured on the same terms as value O of poetry, generally  a shared value.

Metaeconomics handles what philosophers (and most economists ignore) refer to as the “incommensurabilty problem” … price P measured on a different plain from value O … in the use of Figure 6. The decision forum in Figure 6 is referred to as an Other Forum, like a community organization, perhaps represented by an inclusive government, where value O is evolved.  The decision forum of Figure 4 (and Figure 5) is the Market Forum, where price P is evolved. Figure 6 is the Other Forum of Community: Government, the ":" meaning a Government inclusive of all the shared (with the other, like sharing the value of poetry to represent the arts) -interest.

The VoVo possibility frontiers are a trace from the RoRo lines in Figure 4.  The value O curves represent incommensurable, non-money value of poetry (any non-valued good) in a trade-off against money price P goods like pushpins.  The best mix of the price P & value O goods is at point B. Value O reflects the Sacred value of non-money valued goods like poetry, the arts, and, yes, even the value O of sustaining the Spaceship Earth system.

So, while mainstream Microeconomics denies any relevance for non-money valued good like poetry, Metaeconomics embraces the problem.  The analytical system of Figure 5 works to show the influence of Other Forums (other places people make decisions in a Community of shared interest) on the best outcome in the Market Forum. So, value O (of poetry) gives context to the price P for pushpins.  

Best Ever Microeconomics Book

Arguably, the best ever Microeconomics book from which to learn basic principles of both consumption and production, demand and supply is McCloskey (1985), which is still available. Unfortunately, the book applies only Single Interest Theory, as illustrated in Figure 1. Dual Interest Theory will change, and improve, all the problem sets and analysis in McCloskey (1985), and all other Microeconomics books. Why? Well, because Dual Interest Theory sees the key role of the ethic in economic choice, something McCloskey (2020, 2021, 2022) has also come to realize in calling for a Humanomics.  For a Review of said books, see Lynne (2025). 

As made clear in Lynne (2025), Metaeconomics is a Humanomics with a theory, as represented in Dual Interest Theory which transcends Single Interest Theory by bringing the ethic, represented in the shared other-interest, back into play. It is time to write an economics book for the Human and their ethics left in, like McCloskey says it. It is time for someone to revise McCloskey (1985), and all the other Microeconomics books, bringing the ethic back into view like Adam Smith intended. A Metaeconomics book is needed!

More Technical Details are Available

For more technical details on Metaeconomics, in another location on this Website, go here: What is Dual Interest Theory And, for the Mathematically inclined, see the Mathematical Metaeconomics Appendix in Lynne (2020). For more mathematics, also see the detailed paper available through the Website here at Profane & Sacred, and the Law | Metaeconomics.

Does this help? Let me know how I can help you make better sense of Dual Interest Theory in Metaeconomics, as something that transcends and otherwise supplements without replacing Single Interest Theory in Microeconomics.

References

Altman, M. Behavioral Economics For Dummies. Mississauga, ON: John Wiley and Sons Canada, Ltd., Kindle Ed., 2012

Flynn, S. M. Economics For Dummies. 4th ed. Hoboken, NJ: John Wiley & Sons, 2024.

Lynne, G. D. Metaeconomics: Tempering Excessive Greed. New York: Palgrave Macmillan, 2020 (see ways to purchase the book in the Blog on this site: https://www.metaeconomics.info/post/just-in-time-for-xmas-presents ).

Lynne, G. D. “Cargo-Cult Economics to Metaeconomics:  Toward a Humanomics with a Theory.”  Review of Behavioral Economics (2025, in press)

Lynne, G. D., Czap, N. V., Czap, H. J., and Burbach, M. E. 2016. "Theoretical Foundation for Empathy Conservation: Toward Avoiding the Tragedy of the Commons." Review of Behavioral Economics 3 (2016): 245-79.

McCloskey, D. N. The Applied Theory of Price. Second Edition. New York: MacMillan, 1985.

https://www.deirdremccloskey.com/docs/price.pdf

McCloskey, D. N., Carden, A. Leave Me Alone and I'll Make You Rich:  How the Bourgeois Deal Enriched the World. Chicago: The University of Chicago Press, 2020.

McCloskey, Deidre Nansen. Bettering Humanomics:  A New, and Old, Approach to Economic Science. Chicago: The University of Chicago Press, 2021.

McCloskey, Deidre Nansen. Beyond Positivism, Behavioralism, and Neoinstitutionalism in Economics. Chicago: The University of Chicago Press, 2022.

Pepall, L., Antonioni, P and Rashid, M.  Microeconomics For Dummies. Hoboken, NJ: John Wiley & Sons, Inc., 2016.

Smith, Adam. The Theory of Moral Sentiments. Macfie Rafael,  D.D. and A.L. Indianapolis, Indiana: Liberty Fund, Inc. (digital access at digireads.com), 1759/1790.