Broken Window Fallacy

One often hears of how natural disasters or other catastrophic events will be "Good For the Economy". This is an example of the Broken Window Fallacy. Basically by counting one aspect (rebuilding costs of the disaster) and excluding what was lost from the equation (houses say) one can conclude erroneously that everyone is better off by the disaster. For a better explanation, please see the original essay, located here http://bastiat.org/en/twisatwins.html

See also In-Law Effect, That Which Is Not Seen and That Which Is Seen.

This bit of jargon has been viewed 10,518 times.

Return To Economics Jargon