Local knowledge

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Definition

Local knowledge refers to a knowledge that individual economic actors (individuals, firms, or other organizations) have about matters local to them. For instance, an individual may have local knowledge about his/her strengths and weaknesses, desires, preferences, goals, sources of joy, etc.

Local knowledge differs from other forms of knowledge that are more generic, such as the laws of natural science, which are the same for everybody.

Local knowledge is a concept central to Friedrich von Hayek's thinking and is considered an important part of the critique of central planning as a potential solution to the economic calculation problem. It is part of the Austrian school of economics.

References