Parable of the broken window

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Definition

The parable of the broken window or the broken window fallacy refers to two things:

  • A parable (a short story) illustrating a plausible argument on how destruction can stimulate an economy through the creation of jobs and employment of resources to repair the destruction.
  • A counter-argument that seeks to explain what is wrong with this plausible argument, namely that in the absence of the destruction, those same resources could have been employed to create other forms of value. In other words, it ignores the opportunity cost of the resources devoted to repairing the damage.

The parable of the broken window was first described by Frédéric Bastiat in an 1850 essay where he considered this an illustration of the seen versus unseen fallacy.

References

Online articles explaining the parable of the broken window

Article Author Location Comment
What Is Seen and What Is Not Seen Frédéric Bastiat Library of Economics and Liberty full text, translated to English (the original was in French)
The Seen and the Unseen. Part I. On the Economics of Protecting Employment Anthony de Jasay Library of Economics and Liberty
Parable of the broken window (collective authorship) Mises Wiki