Learn what is Economics
Mar 30, 2022
What is economics?
To understand why the study of economics is important, we first need to understand what economics is.
Collins English Dictionary defines economics as: “The study of how money, industry, and trade are organized in society.”
Considered a social science, economics uses scientific methods to understand how scarce resources are exchanged within society. Economists study theories and techniques useful for developing policies in government as they have a deep understanding of how to create efficiency in today’s world.
American economist Thomas Sowell provides another useful definition: “Economics is the study of cause-and-effect relationships in the economy.”
So, why is economics important? This inquiry into cause-and-effect relationships is key to influencing economic growth. Economists will look at risks and benefits on people, the job market, and society when advising how to allocate resources.
Economic theories
There are many different areas of the economics you can study. You can look at these at macroeconomic (large-scale) or microeconomic (individual) levels.
There are four types of economic systems:
- Traditional economic system
- Command economic system
- Market economic system
- Mixed economic system
Economics in real life
Applied economics is the term used to describe how economic theories can be applied to real-world situations. This looks at everything from costs and benefits to predict human behavior to make an informed decision.
Importance of studying economics
So, why do we study economics? Here are five reasons why studying economics is important.
- Informs decisions
Economists provide information and forecasting to inform decisions within companies and governments. This knowledge of economics – or economic intelligence – is based on data and modelling.
- Influences everything
Economic issues influence our daily lives. This includes issues such as tax and inflation, interest rates and wealth, inequality and emerging markets, and energy and the environment. A broad subject, economics provides answers to a range of health, social and political issues that impact households and wider communities.
- Impacts industries
Firms of all sizes and industries have to rely on economics, whether that’s for product research and development, pricing strategies, or how to advertise. This wide influence means studying economics can open up a variety of career options across all sectors of the economy, from agriculture to manufacturing, to banking and consultancy.
- Inspires business success
Understanding how consumers behave is vital for a business to succeed. Economists use theories and models to predict behavior and inform business strategies. For example, how to analyze ‘big data.
- International perspective
Economics affects the world we live in. Understanding domestic and international perspectives – historic and current – can provide a useful insight into how different cultures and societies interact. For international corporations, understanding the world economy is key to driving success.
Should I study economics?
An economics course will give you an in-depth understanding of core economic theory and how to apply it to the real business world.
You will also develop a range of transferable skills, such as:
- communication
- problem-solving
- research
- numeracy
- time management.
Economics is a widely respected field of study and provides an alternative to an Accounting and Finance degree as it offers similar career opportunities for graduates. You could work in job roles within a range of industries, such as:
- Banking
- Finance
- Accountancy
- Business
- Government
- Consultancy