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Please note that my opinions are my own, and the opinions of the anyone or any institution quoted are theirs. The opinions expressed herein do not reflect the opinion of North Carolina State University, its board of directors, the College of Management or any other college, Student Media Authority, or WKNC Raleigh.


Wednesday, September 27, 2006

Christ's Efficiency in God's Economy, or The Greatest Economist

Referring to the entry on the efficiency of institutions, we learn that institutions exist because of some inherent cost-savings. Individual contracts are difficult and costly to negotiate.

If it is the duty of Christians to share their experience, or testify, how best would we do that? If we imagine our contracts being between the testifier (contract provider) and the audience (contract buyer) for the price of an attentive ear it and we imagine the marginal costs and benefits as scheduled below:

Buyer
MC - the time required to receive testimony (t)
MB - the enjoyment of the testimony (e)

Seller
MC - the time required to give the testimony (t)
MB - the fulfillment of duty, satisfaction (s)

Then we can observe that for each contract negotiated, 2t is spent and s+e is gained. For 30 transactions, we can observe that 60t is spent and 30(s+e) is gained.

Institutionalizing the dispensation of testimony would create a situation where several could gather the experience these transactions. Given the same MC and MB for both buyer and seller, and assuming one seller three buyers are participating, we observe that for each contract 4t is spent and s+3e is obtained. Since the MC of the seller remains the same (assuming AVC=0 for each new contract) for each new buyer in the institution, we note a cost equal to that in the first example. We may safely assume that he derives great pleasure from the more people to whom he is able to testify. However, we can add new buyers in this market at no cost, increasing aggregate cost and benefit to the buyer.

Each Buyer
MC - the time required to receive testimony (t)
MB - the enjoyment of the testimony (e)

Seller
MC - the time required to give the testimony (t)
MB - the fulfillment of duty, satisfaction (s) (proportional to audience)

Then ---

Non-institutionalized, with 30 individual contracts
Unit cost analysis
Speaker: 30s/60t or 1/2 unit s per 1 unit t spent
Audience: 30e/60t or 1/2 unit e per 1 unit t spent

Institutionalized, with 30 buyers in one group contract
Unit cost analysis
Speaker: 30s/31t or ~1 unit s per 1 unit t spent
Audience: 30e/31t or ~1 unit e per 1 unit t spent

With institutionalized testimony, we receive increasing returns to scale (in fact, approaching constant returns to scale). Not only does fellowship with man give you more of God, a life of ministry to others gives you a greater reward.
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A note, or caveat: "institutions" do not necessarily have to be churches. In fact, if we include the dispensation of dogma and doctrine as a negative externality in the market for testimony, we see that churches are too prolific--society suffers because of their existence--the dispensation of the spirit is not maximized, ceteris paribus.

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