DHARMIC ECONOMY

Sunil Sondhi
Tagore National Fellow
Indira Gandhi National Centre for the Arts
 Arthasastra
Matter, Mind, and Soul are three objects of study. One
should study philosophy because it helps one to
distinguish between material gain and loss in economics,
between good and bad policies in governance, and
between right and wrong in dharma.

When the three sciences are studied in the light of

philosophy, people are benefited because their minds are
kept steady in adversity and prosperity and they are made
proficient in thought, speech and action. Arthasastra 1.2.2
 Behavioural Economics
Behavioral economics combines elements of
economics and psychology to understand how and
why people and nations behave the way they do in
the real world based on bounded rationality. Kahnman, Thaler

It differs from classical and neoclassical economics,

which assume that most people have well-defined
preferences and make well-informed, self-interested
decisions based on rationality. Smith, Keynes, Friedman, Smauelson
 Bounded Rationality
People have limited cognitive ability, information and
time, and do not always make the “correct” choice from
individual and social point of view, even if information is
available that would point them toward a particular
course of action.

This might be because they cannot comprehend new

information quickly; because they ignore it and instead
choose to go with their emotions; or because they don’t
have the time to fully evaluate all options.
Vasco-Neural Network
 Economyths
Economy can not be understood only through economic
laws, it has socio-cultural and political aspects.

Economy is not made up of separate, rational individuals,

it is a connected, social activity.

Economy cannot be managed using only statistics, it can

be ‘nudged’ by changing behaviour.

The economy is not always fair, it can cause unequal

consequences.
Comparison