• EconAfterHours

ANAVRIN - A Question of Attainability

Updated: Jun 27, 2020

By Rishika Singh

Miranda House, University of Delhi

Every time an exasperated college going student sighs in some part of the world saying, ‘What’s the point of studying? We’re all going to die anyway.’

​ They’re committing a fallacy and funnily, it's not that of not studying!

The belief in heightened fruitlessness of studying because life ultimately ends in death is a fallacy; a mistaken belief that one may rather give up on studies because the unrealistic goal of having to live forever is unattainable. Such fallacies are known as the ‘Nirvana’ fallacy, a term first coined by economist Harold Demsetz in 1969. Comparing a realistic solution with an idealized one, and discounting or even dismissing the realistic solution as a result of comparing to a “perfect world” or impossible standard is indicative of the Nirvana fallacy.

The Nirvana fallacy though age old, has been actively used to criticize public policies for the unrealistic goals it may set out to achieve.Demsetz in his 1969 article “​Information and Efficiency: Another Viewpoint​.” wrote, ‘When looking at a policy, don't compare it to an idealized blackboard model. Compare it to real-world alternatives. Markets fail all the time—this does not automatically justify government intervention. Real-world governments are also imperfect. Government should only intervene if it can provide, in the real world, a better outcome than market processes.’ An advocate of realism, he advised strictly against norms of idealism.

This type of fallacy is often encountered when individuals are reviewing various economic policies or laws. (The following example includes the abbreviations, P​N​= The Nth premise, C= Conclusion)

P​1​-​ There has been a revolutionary change in Indian Economy since the espousal of the New Economic Strategy in 1991. However, Rapid increase in technology forces many enterprises and small scale industries in India to either adapt to changes or close their businesses, leading to speculative increase in unemployment.

P​2​-​ The four major goals of any economic policy are stable markets, economic prosperity, business development and protecting employment.

C-​ Therefore, the economic liberalisation of India was a failure.

This argument is making use of the nirvana fallacy to support a rolling back of LPG (liberalisation, privatisation and globalisation) policies in India and encourage government regulation. Needless to mention, it is fallacious in nature! It is wrong to dismiss a policy because it doesn’t meet the standards set by an ideal economic policy- a creation of fantasy. Policy is no magic wand in the hands of economists that would spell the fairydust of perfection, it is the romanticization linked to the ability of policies to promise a perfect world that gives rise to such ‘imperfect’ reviews. Had the policies been discredited through a sound comparison with realistic alternatives like a command or a mixed economic structure, this misjudgement wouldn’t have taken place. It may be noted here that the example used above is not hypothetical, in fact the economic and political weekly (November 6,2005) reported, ‘Some claim the reforms(of 1991) are "anti-people", when in essence it is defending the interests of the small strata of the salaried.’

Striving for perfection does not lie in the domain of nirvana fallacy, it is the opposition of a measure for failing to achieve perfection, despite showing improvement that constitutes this mistaken belief. But, it is due to this longing for a ‘perfect solution’ that economists working in public policy are subject to a great deal of humour, George Bernard Shaw once said, “if all economists were laid end to end, they would not reach a conclusion.”. Winston Churchill was also once heard complaining that “if you put two economists in a room, you get two opinions. Unless one of them is Lord Keynes, in which case you get three.” Nonetheless, the comparative analysis of such policy ideas help diversify our approach to any policy problem. The streamlining of ideas in one direction only leads to what is known as ‘the stepping on toes effect’ in the Romer’s model.

According to the model, A​`​,​ the number of new ideas produced at any given point, is a function of number of people attempting to discover new ideas, L​A​ and the rate at which they discover new ideas- ​, where A represents the stock of knowledge or number of ideas that have been AΘ^ϕ invented until that point.

However, only a fraction of the number of people indulged in discovering ideas are not party to duplication of efforts. To model this possibility in the production function for ideas, L​A ​is replaced by L​A^λ , where λ is some parameter between 0 & 1. When λ < 1, it reflects externality associated with duplication, also known as the ‘stepping on toes effect’.

λ<1 means that researchers lower their productivity by duplicating efforts i.e., two or more researchers work on the same problem or to produce the same design. It produces a negative externality as researchers start coming in the way of each other. If all researchers toil for one ideal solution to any given problem, ignoring alternative approaches, not only will they be committing Nirvana fallacy but also be adversely affecting the production of new ideas in the society.

In conclusion,although ‘Nirvana’ may be the end goal but one may have to settle for ‘Anavrin’ or ‘Vrinana’ or ‘Irvanan’ or the many permutations that are known to exist, for what is nirvana but a transcendent state in which there is neither suffering, desire, nor sense of self-a mere imagination!


https://cei.org/blog/legacy-economist-harold-demsetz-1930-2019 https://www.logicallyfallacious.com/logicalfallacies/Nirvana-Fallacy https://www.sec.gov/news/speech/peirce-alligators-nirvana https://www.careeranna.com/articles/indian-economy-liberalisation-impacts/ https://courses.lumenlearning.com/boundless-politicalscience/chapter/goals-of-economic-policy/ https://www.jstor.org/stable/4417450?seq=1​ (​https://www.jstor.org/journal/econpoliweek​ ) http://users.econ.umn.edu/~guvenen/Lecture9.pdf​ (Romer’s Model) https://dictionary.cambridge.org/dictionary/english/nirvana

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