The Value of the Ability to Deal with Disequilibria

Explores the relation of a person's education and experience to the ability to reallocate resources, especially under economic disequilibrium. Examples of economic disequilibria include unemployment rate changes, geographical and occupational job shifts, and changes in incentives for geographical or occupational transfer. While this allocative ability is clearly important for entrepreneurs, it is just as important for others, and the enhancement of this ability is one of the greatest rewards of education. Study of the differing economic histories of the agricultural regions of California, Brazil and Canada show that a farmer's level of education is positively related to successful disequilibria adaptations. Likewise, education plays some role in housewives' productivity, mate choice, control of birth rates, and adaptability to the disequilibria of changing household operations. Economic models need to be developed to assess equilibrium; in these, entrepreneurial ability and function would be treated as scarce resources, likely enhanced by education and perhaps by cognitive abilities. Future cognitive studies should examine to what extent the ability to deal with disequilibrium is a learned trait, and whether this trait can be augmented. (CJC)