Understanding Economics

Even to the people that study it, economics earns the moniker “the dismal science.” The field is filled with dry, lifeless numbers that figure into complex mathematic equations. Study of the science requires frequent interaction with tedious terms, like “opportunity cost,” “comparative advantage” and “income elasticity.” Economics is truly unglamorous to its core.

Yet, economics is perhaps inarguably the most important field there is. In truth, economics is a crucial science that helps us understand our existence at every scale, from the individual to the global community. No matter what you do, understanding economics can help you do it better. Here’s how.

Better at Work

Economics is devoted to the concept of productivity — undoubtedly like many of your supervisors. However, to an economist, being productive is not merely producing as much as possible in a given time; rather, being economically productive is generating the appropriate value for the market in a given time.

For example, if you complete three projects a day to earn your company $300, your superiors are likely to overjoyed, but if you saturate the market with 10 projects a day when your company can only sell three, you are outpacing your company’s economic capacity and lowering prices for the consumer. Lower prices will only make your managers angry. Thus, understanding economics will help you be appropriately productive and earn you prestige in the workplace, no matter what you do.

Better with Money

Most economists are quick to tell you that finance and economics are not the same field of study — but usually, economics is whizzes at personal finance. This is because economists have an intimate understanding of the market, which allows them to buy, sell, and save at exactly the right times.

Moreover, economists are abundantly concerned with practicality, which is the guiding force behind good personal finance. In economics, the ideal person (dubbed homo economicus) is rational and self-interested, which means s/he only makes decisions that are clearly beneficial and profitable. By studying economics, you can learn what type of expenditures are safe and which are reckless.

Better in Love

More than physical attraction, more than personality compatibility, economics governs romantic relationships. Behavioral economics, a relatively new field in an old area of study, assesses the economic value of supremely human endeavors, such as falling in love. Whether you realize it or not, every decision you make regarding love is an economic one.

For example, one economist discovered that during hard economic times, even teenagers are more careful about their romantic lives; because caring for a child is more costly today, when a high school diploma is rarely sufficient to earn a living wage, most people are careful to put off marriage (and even sex) until later in life, when their careers are stable. You probably never expected to become a love guru by studying the dismal science.

Better Informed

The media is absolutely bursting with news regarding the economy — the economy is brightening, the economy is contracting, the economy is hurting — but popular news reports always fail to tell listeners exactly what the economy is or does.

Understanding EconomicsTo most regular people, “the economy” is a terrifying yet vague power that rules their lives. However, to those who understand economics even at a basic level, the economy is simply the accumulation of a community’s buying and selling. Instead of succumbing to panic with every news story, you can understand the current economic events around the world — and explain it to your friends who may be less informed.

Better as a Community

Unlike finance studies, which examine small-scale spending and returns, economics is usually concerned with the broader picture: How do certain policies impact the health of the community? As a result, economists have an incredible opportunity to build the most productive, constructive communities possible. Academic economists devote their lives to studying modern-day markets and develop models to improve the processes that shape them, and ultimately enrich society.

For example, 2012 Nobel Prize winner in economics Al Roth created a better organ donation system to help patients receive transplants faster. With more minds trained to evaluate the needs of the community like economists do, we could craft a finely tuned civilization in no time.

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