The broken window fallacy

Here in New Zealand, the recent Christchurch earthquake is definitely a boon for construction firms and is expected to add 0.5% to GDP over the coming year. A thought-provoking discussion to have with your students is to talk about whether natural disasters are actually good for the economy. If the answer is yes, would it have been better if the earthquake had of caused more damage or perhaps hit a much more populated city?

A good introduction to the broken window fallacy can be found on youtube here.

The authors of the video also use it to argue against stimulus spending and I am sure that it could lead to some fruitful discussion and teachable moments about evaluative comment!