Broken Window Fallacy Examples in Economics
Broken Window Fallacy
What Is Broken Window Fallacy?
The Broken Window Fallacy is a fallacy that occurs when you believe that economic growth happens because of destruction. It’s the idea that if people see broken windows, they will think there are no consequences and feel like breaking more windows, which in turn creates jobs for window repairers.
The Broken Window Fallacy is a fallacy in economics that argues if someone breaks a window and the owner doesn’t fix it; then this will lead to more broken windows because people will think no one cares about their property.
This fallacy was first introduced by French economist Frederic Bastiat in his 1850 essay “What Is Seen and What Is Not Seen.”
The idea behind the Broken Window Fallacy is that fixing the window would be like throwing money out of your pocket for no reason at all, but this isn’t true because there are many benefits to repairing broken windows, such as preventing further vandalism and crime, improving safety by making pedestrians feel safer on sidewalks, etc.
The Broken Window Fallacy in Modern Society
The Broken Window Fallacy, according to the economist Frédéric Bastiat, was due to a man named Michel Montaigne. He said that if one sees a town where windows are broken and left unrepaired, it is a sign that the people’s general spirit is unhealthy and disintegrating.
It is a type of logical fallacy in which a person believes that preventing an event’s occurrence will lead to a chain-reaction yielding more benefits than just stopping the initial occurrence. The idea is that each time something goes wrong, it leads to more bad things happening in quick succession. This idea has been disproven many times over.
The Broken Window Fallacy is a fallacy that suggests people or society as a whole benefit from destruction. It may seem intuitive to think that destroying something will lead to new opportunities, but the broken window fallacy doesn’t stand up under scrutiny.
The logic is as follows:
- Shop owners hire a glazier to fix the broken glass, who earns extra money.
- The glazier’s income will grow, which he will then spent in other stores, helping other shopkeepers. (This rise in spending results in a ‘local multiplier effect.’).
- Overall, it seems that the local economy has benefited from a burst of economic activity, even though it stemmed from repairing the broken window.
Broken Window Fallacy Example Explained
The Broken Window Fallacy and the Economic Downturn
The broken window fallacy is a concept in economics in which destruction of the property leads to an overall economic improvement. The reasoning behind this is that destroying property will result in the economy generating more income by replacing the items with new items.
Broken Window Fallacy Examples in Economics
- Dad, by crashing your car, I actually did America a favor. Now, some auto industries will have more jobs, their employees will earn more money, and those employees will spend their money, and who knows, they may come to your store and purchase some of your items!
