In this article, we’ll be discussing the importance of studying economics. There are a variety of reasons a student would choose to major in any discipline. These choices are inspired by different reasons, from family background to the environment or peer group association or it could even be for a choice of career or passion, whichever it is, it is important for you to understand some basic insight about economics.
Economics is a study of people’s behavior to manage and use resources to meet human needs. Every student pursuing economics as a career is open to a very wide range of other career opportunities because studying economics would not limit one to becoming only an economist. It is a course with the choice that informs and influences one daily lifestyle.
A strong course to major in economics would be to have a deep comprehension of how economics works from an individual level to a nation at large and likely enjoy difficult thinking. It enables one to understand the ever-changing world, which includes businesses, market flow, opportunities, and threats. In case you are asking what is the importance of studying economics? This is one of the reasons why studying economics is very important to society.
As a student who chooses to study economics, there are a lot of privileges. You would be able to develop problem-solving skills and also understand how a complex market works and be able to work in any organization. Economists are not only needed in businesses but also in other areas of human living where the need arises for managing resources. What is the importance of studying economics?
Here are 10 reasons why it is important to study economics as a student;
Table of Contents
1. Economic forecaster
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 at a disaggregated level, an economist in engagement with other institutions could predict for as private sector, companies, central banks, and international organizations.
An economist practically evaluates risks, which may be conditions or circumstances that may lead to fluctuating from their initial estimates. Hence demonstrates 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.
2. Economists understand unemployment
An economist would define unemployment as a part of the labor force actively seeking employment. Dividing the unemployed over the employed gives an economist a statistically calculated percentage. An indicator used in understanding the operations of the total country’s labour force.
Unemployment consequentially has an adverse effect on a country’s economy, especially when the rates are so high. This can draw the attention of the media and other nations of the world too. There are considerable reasons for unemployment of a particular person in a country. But if a country experiences recession or economic decline, most of the private sector may be forced to lay off staffs to reduce costs. This, in turn, is causative for sometimes the mental minds of both the unemployed and employed. Reasons are numbers to an economist, which they could also predict or decipher in an economy.
3. Economists earn a high paying Job
This is another reason why some students study economics as a major. It gives you the power to examine the labour markets, prospective private companies, industry tendencies or forces which direct the economy as it is. Definitely a major in economics could land you different jobs. One of such is a market research analyst, where they are required to apply skills like graphical representation, statistical skills and a critical mind for thinking. Another is an economic consultant, needed across various sectors like government, finance, education, healthcare and business. They are required also to analyze and research economic strategies to help enhance performance.
Any student that enjoys analytical thinking could major in economics which will help to understand deeper how to coordinate and interpret data using mathematical formulas and statistics. There are models also in place to learn, which helps to predict the effect of policy decisions, industry tendencies, climate change, investment, just to mention a few. The ability for problem-solving and great communication skills should be a strong suit for such an interested student, they are required to evaluate problems and recommend solutions.
4. You will understand the Market dynamics
Choosing to study economics will help you to understand the dynamics of the market. Market dynamics are factors that impact the market. An economist perspective would mean demand and supply, opportunity cost, scarcity, equilibrium just to mention a few.
The course will expand your vocabulary and knowledge to understand how the market works even if you would not be working primarily as an economist, but always at the back of your mind to help understand your organization market and can also help to influence the strategic decision in improving your organization’s performance. This is one of the major importance of studying economics as a students.
5. Able to make a good decision on personal spending
There is a funny idea that economists are stingy people. Well, they are just about making sound economic decision. Learning to major in this course would enlighten your scope of reasoning. Eventually with passion it would turn into a habit that is economically sound and financially healthy. Economics will teach you about market behaviours and organization trends.
For example, learning about willingness to pay theory could help you develop your own spending habits, which will prove your sound economic mind and able to influence analytical thinking in immediate family members if possible.
6. Learning to optimize your quick cognitive response
Economics degree, as highlighted earlier, would strengthen and stretch your analytical thinking making you thorough in your reasoning process. Of course, it includes using models and statistical formulas but it is a little bit more than this models or demand curves. So many theory of economics deals with the study of human rational behaviour or reactions which sometimes are unpredictable because they are largely based on assumptions. And when they decline it is paramount to know and understand how to deal with such situation.
Hence, improving your cognitive reasoning is a plus for any student interested and willing to take up the challenge. Optimizing your mind to learn cognitive prejudice goes a long way to affect important economic decisions which will give you the privilege to have the right tools in anticipating people’s behaviours in real-world situations, be it an adequate or an inadequate reaction.
7. How to leverage economic tools
Economics will obviously teach you so many theories and this would practically enhance your ability to make use of various economic tools in any real-world situation which you may be faced with, hereby you learn how to generate tools to make good business decisions. Economic tools enable the preparation of a huge decision. It is a logical method to assume the optimum use of scarce resources, distinguish vacant alternative and choose the best alternatives to get a desirable result.
8. 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 a variable or fixed cost.
9. You would be able to checkmate your spending habits
As an economist student, you have the advantage to understand how money works and how to use your resources without wasting them. If you have a business or help someone to manage their business, you would be able to make use of the problem-solving skills which been economists teach you. You will value money more and always look for ways to make better use of money instead of spending it. Here is the importance of economics to individual.
10. You can be an economist adviser
Even without graduating from school, you can get a side job as an economics adviser. You can help people manage their business resources and also get paid too. As an economist, you can also get a job as a government official to help out during the recession by giving advice on how to get a better economy.
Why study economics?
Studying economics brings a lot of advantages and can be said to be a satisfying profession. Economics has a perfect relationship between humanities and pure sciences, as economics is a social science that applies its problem-solving skills or approach to understanding the way the human mind works in relation to how it manages and uses its resources.
- Economics is a proud profession: studying economics is an elegant profession, not only does it deal with the problem-solving analytical skills but it also brings the human behaviour in relation to how it uses its resources.
- Economics can be applied in everyday living: we are found to apply economics in our daily lives, starting from making choices on how and what to spend money on, how to save money, pay bills, allocate assets and so much more. In solving the financial needs of our daily lives, we are all economists.
- Behavioural economics and bias: in making good decisions in any areas of life, we are always not considering or even look at the various economic indicators used in economical decision making. All of these perceptions about the economic outlook can influence the certain decision making of any business. The bad state of the economy and also high unemployment rate may always discourage students from studying.
Why is Economics Important
Economics is a social science that is involved with the production, distribution, and consumption of goods and services. It is also the course that explains how people use and manage their resources. Economics is said to be broken down into two main types; macroeconomics and microeconomics. Macroeconomics focuses on the economy on both the national and international levels, while microeconomics focuses on how individuals, businesses, and organizations make their decisions. It also explains how people react to changes in the prices of commodities and why they behave whichever way when there is a change in the price level. There are also three types of economic systems which are; capitalism, socialism, and communism.
In capitalism, it can be explained as an economist system of production whereby, businesses are created to sell goods for the sole purpose of making profits. The capitalist who are the business owners, in this case, is responsible for the tools used in the production of goods and also the finished products. They are in charge of getting workers who are paid their wages. The capitalist always relies on the market to help in its distribution of goods that are produced for sale.
In socialism, the workers are the owners of the tools for production, other production costs, and also in charge of the finished products which are the end of the day, the profits gained are shared. The socialist also creates business for profits purposes but the difference from the capitalist is that the workers are in charge of the production cost as well as the profits instead of relying on a business owner who just pays the wages.
In communism, there are no private property owners, as the people of the society are involved in the running of the business and as such share the profits too. The communist economic system does not make use of the central market as the socialist and capitalist does but instead workers with those who are in the production and in the end distribute the goods and services to the consumers based on need. It is safe to say, the communist system of economics does not operate its businesses for profit gain.
Where Can I Study Economics
Economics is a broad course that can be studied in any high institution of learning. Universities, polytechnics, and others around the world offer this course either as an undergraduate or at the postgraduate level. There are also some professional courses that offer economics as a professional course of study. There are a lot of scholarships for international students to study economics you can also take advantage of. Here are Top 10 Universities where you can study economics:
- Massachusetts Institute of Technology, United State
- Harvard University, Harvard
- London School of Economics and Political Science, United Kingdom
- University of Oxford, United Kingdom
- Erasmus School of Economics, Neitherland
- University of Melbourne, Australia
- ETH Zurith, Switzerland
- Hong Kong University of Science and Technology, China
- University of Toronto, Canada
- Bocconi University, Italy
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Different Areas of Specialization in Economics
Economics is a broad course with various areas of specialization for you to pick as an aspiring student. Student asking what are the importance of studying economics needs to know these areas of specialization. These areas of specialization teach economics in different formats but all have the same goal of exploring the economic tools for the sake of understanding how people react to their money and how it is been used.
- Information economics: teaches how to explore any information given on the economic ground. It helps to find and understand the mutual agreements made between two different business and how to solve their crises.
- Education economics: This is a branch of economics which teaches you how to analyses various economics studies into teaching. This branch also teaches you how to apply economics to educational policy.
- Urban economics: This is a branch of economics which helps you to study how to use economic tools to study urban cities how they operate and their development.
- Science economics: this branch of economics known as science economics helps you to use scientific methods related to economics to interact with economic situations in various ways. This branch of economics enables you to become familiar with the different approaches used in conducting research in various organizations and how their resources and funds are used.
- Labour economics: this branch is also referred to as the economics of labour and it involves the micro economics and macro-economic system in which you understand the behaviour of the labour market and how individuals react to the level of price change.
- Development economics: this can be said to be the study of economics in developing countries. It is generally the study of how you can use economic tools to promote the economic growth of the nation, increase the employment rate and also in the redistribution of wealth in the society.
How to Apply Economics in Daily Living
The importance of economics to our daily life activities varies, although some of the actions which are taken can be said to be common sense economics gives a better understanding of how all these things work. Below are explained some ways in which economics can be applied.
- Buying high-quality goods for a good price: economics helps to understand that buying or paying for goods which can give you the maximum satisfaction is better than paying for goods which you would not enjoy. This is common sense but as an economist, you have a better understanding.
- Opportunity cost: this is an intrinsic aspect of economics. This helps to explain and understand the lesson of scarcity and limited resources. For example, if you use your limited budget on purchasing a particular type of food, therefore, the opportunity cost is that you cannot use that same money for other needs such as entertainment.
- Diminishing returns: this is said to be when the level of profits gained is less than the invested money. Diminishing returns can set in at any point in time for any business or organization. Let’s take, for example, if you buy a piece of cake in three different portions, you eat the first portion and get the satisfaction you want when you eat the second portion, the satisfaction reduces and likewise on the third round. This literally explains that the money you use to purchase the cakes compared with the level of satisfaction you got is unequal. This also happens in business too.
- Economics helps to understand the market: economics helps to understand the market trend, how to fix market failures and also how to understand customer behaviour. For instance, as a business owner and you produce goods which are taken to the market for sale, economics would help you to understand how your consumers receive the goods and how they are responding to its sales.
Importance of economics to students
Economics is very important to students because having an economics degree gives you a high level of mathematical and statistical skills. It also gives you an edge in case you want to study Data Science. As a student of Economics, you can also apply economic principles to problems in business, finance, and the public sector.
The importance of economics: to students are The importance of economics to students varies. Here is the importance of economics to students;
- communication – presenting ideas in a well-defined framework and supported by evidence that uses complex data
- numeracy – handling complex data and techniques of mathematical and statistical analysis
- analytical skills
What Qualifications are Required for Studying Economics
In studying economics there are a number of qualifications and qualities needed for you to achieve your dream as a certified economist.
- First of all, you must love the course with all your mind. The love of economics would enable you to give your all and study the course properly.
- Aside from having a great interest in studying economics, you must be able to think logically and clearly. Economics involves a lot of studying with analytical problem-solving skills. Therefore, you must always pay attention to the smallest details while working.
- As an economist, you must always be a problem-solving enthusiast. You must be able to view problem, proffer solutions and conclude all necessary things.
- Another requirement is your academicals skill. As an economist, you must understand math and all calculations necessary in the studying of economics. The course is full of calculations and you must be ready to do a lot of calculations as you study.
The importance of economics to society cannot be overemphasized because it is a way of life. This article has shown how we apply economics in our daily living. As a student aspiring to study economics, there are different areas of specialization which you can focus on as a graduate, in all you should be ready to apply it to your daily living. Economics helps one to understand market operations and how to apply the problem-solving skills to the understanding of human behaviour in relation to managing its resources