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Broken Window Fallacy UPSC

The Broken Window Fallacy is a concept in economics that helps explain why the destruction of something, like a broken window, doesn't necessarily create economic benefit, despite appearances. The fallacy arises when people focus only on what is seen (the new window being purchased) and ignore what is unseen (other potential uses for the money spent on the window).

Here's a simple breakdown:

  1. Scenario: Imagine a shopkeeper whose window gets broken.

  2. Immediate Reaction: People might think that this is good for the economy because now the shopkeeper has to spend money to replace the broken window.

  3. Fallacy Unveiled: However, what is often overlooked is that the money spent on the new window could have been used elsewhere, perhaps for something more productive or enjoyable, had the window not been broken.

  4. Opportunity Cost: The fallacy highlights the importance of considering the "unseen" or the opportunity cost – what could have been done with the resources (money, time, effort) if the window had not been broken.

In essence, it reminds us not to only focus on the visible, immediate effects of an event but also to consider the broader, long-term consequences and alternative uses of resources.

Broken Window Fallacy UPSC

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Broken Window Fallacy UPSC.

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