Nirvana fallacy

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The Nirvana Fallacy (engl. Nirvana fallacy ), and fallacy of the perfect solution , commits when you compare something real or viable with an unrealizable model-ideal and on this basis - without the unreality of the ideal to be considered - a verdict or a decision is made . This exposes himself or herself to the accusation of nirvana .

The American economist Harold Demsetz first used the term in 1969 in welfare economics in connection with the analysis of economic and political institutions . He criticized the theories of Cambridge economists such as Pigou , Sidgwick or Marshall , according to which state regulation of markets could eliminate market failures and improve social welfare. Demsetz believed that the Cambridge economists made the mistake of comparing the results of real, imperfect market institutions with those that an idealized state could achieve. They then made a fallacy by concluding on the basis of this comparison that the real state would improve the market result or even achieve perfect results through intervention. The conclusion does not take into account the restrictions that a real state is subject to (→ state failure ).

“The view that now pervades much public policy economics implicitly presents the relevant choice as between an ideal norm and an existing" imperfect "institutional arrangement. This nirvana approach differs considerably from a comparative institution approach in which the relevant choice is between alternative real institutional arrangements ”

"The view that is prevalent today in large areas of economic theory of economic policy implicitly presents the relevant decision as one between an ideal norm and an existing" imperfect "institutional arrangement. This nirvana approach differs considerably from a comparative institutional approach, where the relevant decision is between alternative real institutional arrangements "

- Harold Demsetz

The term was picked up and widely used in the neoclassical theory of economic policy and the analysis of law and economics in the 1970s. Economic historians Roger E. Backhouse and Steven G. Medema later pointed to statements by Sidgwick, Marshall, and Pigou, which did show an awareness of the problem of government restrictions.

The wrong conclusion threatens not only if an omniscient, altruistic, welfare-maximizing state planner is assumed for planned state interventions in real markets. As Demsetz already noted, there is also a risk of the opposite fallacy: when existing state institutions are compared with equilibrium models of ideal markets under complete competition with market participants who correspond to the model concept of Homo Oeconomicus . The US-American commercial lawyer Melvin A. Eisenberg called this heavenly market fallacy , i.e. the fallacy of heavenly markets .

After the term was initially used in comparing economic and political institutions, it is now sometimes understood more generally, for example as an expectation that is based on a perfect state and therefore can only be disappointed in reality, or as a fallacy of the perfect solution , the realistic one Solutions based on an ideal, impossible to achieve standard are undervalued and rejected.

The German philosopher Daniel-Pascal Zorn describes errors in right-wing populist and libertarian thinking as the nirvana fallacy: He calls the accusation of lying press , which is confirmed in the disappointed, nirvana -led expectation that the media would accurately depict reality, and that Assumption of some libertarian worldviews of a naturally unlimited freedom of the human being, which can only be disappointed.

The fallacy can be avoided by not an unattainable ideal, but real conditions as the touchstone and decision-making basis. In the political and economic context this means that only realized or realizable institutional arrangements should be compared. The market failure should be contrasted with the possibility of a state failure and vice versa. The comparative institutional analysis (KIA), i. H. the comparison of real and feasible institutions accordingly avoids the fallacy.

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Individual evidence

  1. ^ A b Harold Demsetz: Information and Efficiency: Another Viewpoint . In: The Journal of Law & Economics . April 1969, p. 1-2 , doi : 10.1086 / 466657 .
  2. ^ Roger E. Backhouse, Steven G. Medema: Economists and the analysis of government failure: fallacies in the Chicago and Virginia interpretations of Cambridge welfare economics . In: Cambridge Journal of Economics . July 2012, doi : 10.1093 / cje / ber047 .
  3. ↑ a b Christopher Holl: Perception, human action and institutions: von Hayek's institutional economics and its further development (=  investigations into order theory and order policy . Volume 47 ). Mohr Siebeck, 2004, ISBN 978-3-16-148483-4 .
  4. ^ Wolfgang Eggert: Market failure. In: Gabler Wirtschaftslexikon. February 19, 2018, accessed March 1, 2019 .
  5. ↑ Thrainn Eggertsson: Economic Behavior and Institutions: Principles of Economics Neoinstitutional (=  Cambridge Surveys of Economic Literature ). Cambridge University Press, 1990, ISBN 978-0-521-34891-1 , pp. 148 .
  6. ^ Melvin Aron Eisenberg: Bad Arguments in Corporate Law . In: Georgetown Law Journal . January 6, 1990.
  7. ↑ Steffen Minter: Nirvana accusation. In: Gabler Wirtschaftslexikon. February 19, 2018, accessed March 1, 2019 .
  8. ^ A b Daniel-Pascal Zorn: Logic for Democrats . Klett-Cotta, 2017, ISBN 978-3-608-96096-9 , Glossary - Nirvana fallacy, p. 63,125,220,296 .
  9. ↑ Bo Bennett: Logically Fallacious: The Ultimate Collection of Over 300 Logical Fallacies . ISBN 978-1-4566-0752-4 , Nirvana Fallacy.
  10. ^ Klaus F. Zimmermann : New developments in economics . 2013, ISBN 978-3-662-12571-7 , pp. 167 .