No one subject is better than another. However, numbers and figures play a large role in how societies function. Economics is the study of the facts and figures that affect government, households, families, businesses, and the overall state of the world’s resources.
For those who have ever wondered, “why is economics important?” or been unsure of why economics is a smart subject to study, we will fill you in on all you need to know.
Understanding economics can change your life on a day-to-day level, as well as play a role in helping you understand the bigger picture of your local government and world affairs. We will break down the details: from defining economics to reasons why one may choose to major in the subject in college.
What is economics?
Economics is a social science that deals with the production, use, and transfer of wealth. It concerns issues that impact financial situations and examines the distribution of wealth amongst organizations and individuals. It incorporates a number of subject areas such as politics, law, sociology, and geography. There are a variety of different areas of economics you could explore or specialize in. Some of these areas are:
- Development economics – focuses on the development process in low-income countries
- Business economics – the application of economic theory and methodology to business and businesses
- Environmental economics – concerns the economic impact of environmental policies
- Macroeconomics – covers large-scale economic factors.
A degree in economics covers current real-world issues. While the course focus on mathematics and its application to economics, it also includes a theoretical aspect to build an understanding of economic models within different societies. You will learn how organizations and individuals make international decisions and how to forecast potential changes in the world of economics.
Reasons why you should study Economics
Studying Economics will teach you the fundamentals that will be needed to interpret graphical illustrations that may be linked to typical economic discourse as well as the tools to develop a business strategy. The study of Economics exposes how individuals, firms, or governments manage and utilize their resources for better efficiency.
Students who opt for Economics in their subject selection not only gain the skills needed to analyze various situations and complex markets but they embrace problem-solving skills in various ways as well as the business sense necessary to succeed in the professional world. A notable mention is a need for economists in every industry not just only in business as they have the skill to forecast business optimism.
A further career path as an economist is a profession that brings much comfort and as well a challenge. Economic forecasting is an effort to predict the future economic situation. There are processes and indicators combined to attempt this professional feat. An economist could forecast inflation rates, unemployment or a fiscal deficit which are at an aggregate level, and also in a disaggregated level, an economist in engagement with other institutions could predict for as private sector, companies, central banks, and international organizations, just to mention a few.
An economist practically evaluates risks, which may be conditions or circumstances that may lead to a result fluctuating from their initial estimates, hence demonstrating the thorough and deep thinking process used to final forecast estimates. Forecast results are sometimes generated annually but at other times updated frequently. Though there are so many tools put in place to help economists achieve results but need the statistical knowledge and models to follow in order to arrive at the result for particular variables.
Economics Enhances Other Majors
Economics vastly complements other majors. Not only do business majors like Accounting, Marketing, or Finance contain Economic theories, principles, laws, definitions, or concepts in their curricula, but also non-business majors like Journalism and Computer Science are interconnected to Economics.
You’ll Expand Your Vocabulary
Knowing terms like scarcity (limited resources), opportunity cost (what must be given up for the sake of obtaining something else), or equilibrium (the price at which demand equals supply) will give you a better understanding of market dynamics and whether people act rationally or irrationally.
Economies of scale
Economies of scale are cost advantages earned by companies when the output becomes productive. Good knowledge of this by an economist can help a company to accomplish economies of scale by improving output and reducing costs. This is possible because the costs are distributed over a huge number of goods. It is also important to note that the size of business matters, the bigger the size the more cost that would be saved. Costs can be variable or fixed cost.
Economics assumes people are rational. Economics assumes that people choose the activity which optimizes their utility. When people want to buy a season ticket to watch Leeds United, you can tell them this is irrational behavior. However, the Leeds United supporter will definitely appreciate the cogency of your economic reasoning and will, more than likely, start supporting Doncaster Rovers with immediate effect.
An economics degree will provide you with subject-specific skills, such as the application of economic models and principles, financial markets, and so on. However, you will also gain skills that can transfer to many other subjects and professions. Some of these include:
- Communication – explaining complex information and presenting findings
- Numeracy – applying statistical analysis and mathematical methods
- Problem Solving – gathering of information, making recommendations, and drawing conclusions
- Computing – Using various forms of IT software
- Time Management – completing tasks within tight deadlines and managing competing priorities
- Analytical skills – finding new research methods, observing data, and making recommendations
You’ll Understand the Nuances of the Field
Many people think of economics as just curves, models, and relationships, but in reality, economics is much more nuanced. Much of economic theory is based on assumptions about how people behave rationally, but it’s important to know what to do when those assumptions fail. Learning about cognitive biases that affect our economic decision-making processes arms you with the tools to predict human behavior in the real world, whether people act rationally or irrationally.