Reasons for Studying Economics

John Maynard Keynes, one of the most influential economists once remarked:” The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe they to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist”. 

Most of the ideologies of the modern world have been shaped by prominent economists of the past like Prof Adam Smith, David Ricardo, J.S.Mill, Karl Marx, and J.M.Keynes and current world leaders seek the advice and policy suggestions of today’s economists.

1. Political Problems have Important Economic Aspects:

A basic understanding of economics is essential if one has to be a well-informed citizen. Most of today’s political problems have important economic aspects. As voters, we can influence the decisions of our elected officials. But intelligence at the polls requires a basic working knowledge of economics, and a sound grasp of economics is even more helpful to the politicians themselves. 

2. It helps Students to Improve their Analytical Skills:

Economics lays great stress on precise, systematic analysis. Thus, studying economics invariably helps students improve their analytical skills, which are in great demand in the workplace. Also, the study of economics helps us to make sense of the everyday activity we observe around us. 

3. Economics is Vital to Business:

Economics is also vital to business, an understanding of the basics of economic decision making and the operation of the economic system enables business managers and executives to increase profit. The executive who understands when to use new technology, when to merge with another firm, when to expand employment, and so on will outperform the executive who is less deft at such decision making. The manager who understands the causes and consequences of recessions or inflation can make more intelligent business decisions during these periods. 

4. I t helps Consumers and Workers to Make Better Buying and Employment Decisions:

Economics helps consumers and workers make better buying and employment decisions like for example, how can you spend your limited money income to maximize your satisfaction? Which occupation pay well, which are most immune is unemployment. 

5. It helps People to Make Better Financial Decisions:

Similarly, an understanding of economics makes for better financial decisions. Someone who understands the relationship between budget surpluses and interest rates, between foreign exchange rates and exports, is in a better position to successfully allocate personal savings. So, also, someone who understands the business implications of emerging new technologies. 

6. It examines Problems and Decisions from the ‘Social’ rather than the ‘Personal’ Point of View:

In spite of these practical benefits, however, economics is mainly an academic, not a vocational subject. Unlike accounting, advertising or corporate finance, economics is not primarily a how-to-make-money area of study knowledge of economics and mastery of the economic perspective will help run a business or manage personal finance, but, that is not its (economics) primary objective. Instead, economics ultimately examines problems and decisions from the ‘social’ rather than the ‘personal’ point of view. The production, exchange and consumption of goods and services are discussed from the viewpoint of society’s best interest.

Notes provided by Prof. Sujatha Devi B (St. Philomina's College)