My first tryst with economics was studying it as part of my curriculum as one of the subjects under the broad umbrella that is social science. Looking back, my opinion about the subject at the time was something along the lines of “a heavily theoretical subject with a focus on the trading and business side of things”. Given this, it was surprising learning this was rather far from the truth when I decided to give economics a second whirl once lockdown was imposed.
Across a couple of online courses and a wonderful YouTube series on economics by Crash Course, the common induction into each of them involved an explanation of how economics is the study of human choices.
It was only then that I realized why economics was a subset of the “social” sciences back in school. As I delved deeper into these courses, it surprised me how none of this seemed familiar even though I had studied it just a couple of years ago but then again, studying something as part of one’s curriculum and learning it are two very different things but that discussion can be earmarked for another day.
One of the formal definitions of economics that I subscribe to more than others is “The social science that studies how people interact with value; in particular, the production, distribution, and consumption of goods and services.”
The reason I like this definition is because it does a pretty good job at encompassing what is truly a very vast field. Economics works under the assumption that humans, governments, and organizations act rationally in order to seek the most benefit or utility and it is on this core premise that economics studies how to allocate the limited resources we all share.
Given it’s the study of human choice, it is but natural that economics is about answering questions aplenty. How much should a product be priced to maximize profits? How does an influx of tourists into a country affect its currency’s foreign exchange rate?
While these are the commonly asked questions, economics can answer a much broader spectrum of questions that are seemingly unrelated to the field but on closer inspection, are a study of human choices. For example, it can help answer questions like “Are students the only ones who cheat on examinations, or are the teachers part of the problem too?”, “Even though a real estate agent’s fee is a percentage of the price they manage to procure for you, is the highest price for your property actually in their best interest?”
A great book to learn more about this seldom explored side of economics is Freakonomics by Steven Levitt and Stephen Dubner, one I strongly recommend reading. Very often, the answers in Freakonomics are counterintuitive, provide a deep insight into human behavior and the society at large and shed light on a lot of issues in the systems we construct for ourselves.
– Article by Ankit Sandeep, Third Year Department of Civil Engineering.