Why study economics: Importance of economics

Reviewed by Soliu.

Economics is important because it’s essential for resource distribution, decision-making, and scarcity control. It reveals human behavior, company strategies, government policies, and global marketplaces, allowing analysts to solve real-world issues, like unemployment, inflation, hardship, etc. 

The importance of Economics can never be overemphasized. Economics helps people understand their surroundings. It lets people better understand people, businesses, markets, and governments and respond to the challenges and possibilities that arise when things change.

Economics majors are well-positioned in an ever-changing world because they have problem-solving and analytical skills that enable them to succeed in a wide range of career paths, including law, risk management, actuarial, finance, foreign affairs, public administration, politics, policy analysis, health administration, entrepreneurship, market analysis, journalism, and untried future careers.

What Is Economics

At its foundation, economics studies how individuals, communities, and nations manage and use resources. Microeconomics studies individual decisions, while macroeconomics studies the economy as a whole. Both varieties of economics use historical trends and current situations to influence business decisions and forecast how markets will act.

Economics in real life 

Applied economics refers to the application of economic ideas to real-world problems. This considers everything from costs and advantages to projected human behavior to make an informed decision. An economics course may teach you the principles of deciphering graphs and other critical financial data and the tools needed to construct a successful business strategy.

But how can you determine if economics is the correct major for you? Consider the potential effects of various economics programs on your personal and professional objectives.

WHY IS STUDYING ECONOMICS IMPORTANT?

Students who study economics learn how to understand complex markets and obtain strong analytical and problem-solving skills and the business acumen required to excel in the professional world. Economics can help workers in all fields and areas of life, not just business.

Here are twelve benefits of studying economics and how they can improve your organization and career.  

1. Providing you with the knowledge and skills that employers want

At its foundation, economics is the study of how to evaluate options and make better decisions. It fosters critical thinking and problem-solving abilities to make sound decisions. It fosters analytical skills for analyzing data and making tough decisions.

These abilities are in high demand in both the public and private sectors. The National Association of Colleges and Employers (NACE) conducts an annual survey that regularly reveals employers value the abilities learned while studying economics—making decisions, solving issues, gathering and processing information, evaluating statistics, and writing and speaking effectively.

An economics education can boost your employment in a range of areas. According to the World Economic Forum’s Future of Jobs Report, analytical thinking and complex problem-solving skills will be increasingly relevant to employers by 2025, both of which can be learned by studying economics.

Economists give businesses and governments facts and predictions to help them make decisions. This understanding of the economy, also called “economic intelligence,” is based on facts and models.

Whatever the future holds, an economics major can help people flourish. People can make better choices and solve more problems if they know how decisions are made, how markets work, how rules affect outcomes, and how economic forces drive social systems. This is related to success at work and in life. 

2. Enabling you to contribute to the greater good

Another importance of economics is its ability to enable you to contribute to the greater good. The basic framework for public policy study is economics. The major teaches students about the fundamental policy concerns that influence market and social outcomes.

An economist understands not only the immediate issues of trade-offs benefits vs. costs, market failure, and public finance but also the more significant questions of generational repercussions, welfare impacts, and inequality.

Students who major in economics are ready to take part in policy debates and take steps to improve economic and social growth.

3. Preparing you for graduate school and law school

Economics teaches logical thinking and clear reasoning. This not only helps people succeed emotionally and professionally, but it also helps students prepare for graduate programs and law school.

• Law school 

According to studies, economics majors regularly have the best average LSAT scores of any degree. Economics majors have far higher acceptance rates to law school than most majors, including pre-law schools.

• MBA 

Economics majors have the broad perspective and problem-solving skills valued by top MBA programs, and studies show that they have the highest average GMAT score of any business major.

• Graduate programs 

Economics provides a solid foundation for graduate study in fields such as economics, public policy, political science, and sociology, to name a few. Students considering a graduate degree in economics might view minoring in mathematics.

4. Enhancing other majors

Most other majors can benefit from a study of economics. When combined with a more career-specific business major like accounting, marketing, finance, or computer information systems, the breadth, and flexibility of an economics major can be an invaluable way for people to diversify, and even more so when combined with a non-business major like computer science, healthcare management, journalism, environmental science, building science, or design. Economics is essential in our daily lives. Understanding past, present, and future models lets us use them to help society, states, businesses, and people. 

Whether it is scarcity (limited resources), opportunity cost (what you have to give up to get something else), or equilibrium (the price at which demand equals supply), an economics course will teach you the fundamental principles you need to understand how markets work.

Even if you do not use these words frequently in your current work, studying them will help you understand market dynamics in general and how they apply to your firm. Economics is more than memorizing a series of technical terms; it is about using those words to create a viable company strategy. 

Once you know what the terms mean, it is easier to use theories and frameworks like Porter’s Five Forces and SWOT analyses to evaluate situations and make different economic decisions for your company. For example, many companies have to decide whether to use a combined pricing model or a separate pricing model, or they have to figure out how to make the most money.

6. You’ll Understand Your Spending Habits

Economics will teach you about how your company and its market work, but it will also teach you about how you spend money and what you value. Willingness to Pay (WTP), for instance, is the most money someone is willing to pay for a good or service.

There is often a difference between hypothetical WTP and actual WTP. Understanding this difference can help you determine why you act the way you do and help you make better financial choices.

7. You’ll Master the Nuances of the Field

People often think that economics is just about curves, models, and links, but it is much more complex than that. A lot of economic theory is built on the idea that people act logically, but it is essential to know what to do when these assumptions do not hold up. When you understand how cognitive biases affect our economic decisions, you can predict how people will act in the real world, whether they act rationally or incorrectly.

8. How to Leverage Economic Tools

One thing is to learn about economic theory. Another is to get the tools you need to make business choices. Economics will teach you the basics and give you tools for analyzing things in the real world.

For example, conjoint analysis is a way to use statistics to find out how much people want certain product features. This tool will help you understand the surprising complexity of the tradeoffs people make every day between features and price.

Say you work for Apple Inc. and want to know which part of the iPhone should be improved: the battery life, the screen size, or the camera. A conjoint analysis will tell you which changes people care about and which are worth the time and money of the company.

9. You’ll be better prepared for Graduate School

Learning about economics can help you make better choices in your personal and work life. It can also help you if you want to get a graduate business degree. If you’re going for an MBA, studying economics can give you the problem-solving skills and technical know-how you need.

An MBA usually includes classes in finance, accounting, management, marketing, and economics. If you decide an MBA is correct, you will be one step ahead. Also, if you know the basics of economics, you can use economic ideas and models to figure out if going to graduate school is worth the money.

10. Impacts industries

Another importance of economics is its impact on industries. Economics is essential for businesses of all sizes and fields, whether researching and developing new products, setting prices, or figuring out how to market.

Because economics affects so many different parts of the business, studying it can lead to jobs in many fields, from agriculture to manufacturing to banking and consulting.  

11. Inspires business success

A business needs to know how people act to do well. Economists use theories and models to predict how people will perform and how to run companies. For instance, how to look at “big data.”

12. International perspective 

Economics changes the world we live in. Understanding the past and present domestic and international views can help you understand how different cultures and societies interact. For foreign businesses to be successful, they need to know how the world economy works.

Also, many jobs require that you know about economic ideas, models, and connections. Economics students could work in finance, banking, insurance, politics, or healthcare management, among other places. You will also be able to move up in your field since understanding the economics that drive your domain will help you do your job better.

Should I study economics?

In an economics class, you will learn about the basic ideas of economics and how to use them in the real business world. You will also learn a variety of skills that you can use in other situations.

• communication
• problem-solving
• research
• numeracy
• time management

Economics is a well-respected field of study that gives graduates the same job possibilities as a degree in accounting and finance. You could work in many different areas, such as:

• Banking
• Finance
• Accountancy
• Business
• Government
• Consultancy 

Economic theories

You can learn economics in a lot of different ways. You can look at these on a macroeconomic (big picture) or a microeconomic (small picture) stage.

There are four different kinds of economies:

1. Traditional economic system
2. Command economic system
3. Market economic system 
4. Mixed economic system 

 Some Famous Quotes by Economists Through History

“The hardest thing in the world to understand is the income tax.”
– Albert Einstein 

“When men are employed, they are best contented.”
– Benjamin Franklin 

“Our necessities are few, but our wants are endless.”
– Fortune Cookie

“Investment is a flighty bird which needs to be controlled.”
– J.R. Hicks

“Nothing so weakens a government as inflation.”
– J.K. Galbraith 

“We might as well reasonably dispute whether it is the upper or the under blade of a pair of scissors that cuts a piece of paper, as whether value is governed by demand or supply.”
– Alfred Marshall

Final Thought: Importance of economics

If you want to get an education in economics, you have a lot of choices. Depending on your personal and professional goals, where you are, and other essential factors, you may get an undergraduate or graduate degree in economics or take an online economics study to improve your future job prospects.

Whether you are new to the business world or a seasoned boss, it is essential to know a lot about how markets work, pricing strategies, and how customers act.

Do you want to get to the next level in your career? Enroll for an online course, Economics for Managers, or other business essentials courses to learn how to apply economic principles to business decisions.

Be sure to share your progress with us. Good luck, and stay safe.