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essay on why i like economics

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7 Reasons Why You Should Study Economics

Red and Blue Economics Graph

  • 30 Nov 2017

An economics course can teach you the fundamentals needed to decipher graphs and other important financial data, as well as the tools to develop a successful business strategy.

But how can you know if studying economics is right for you? Consider the possible outcomes of various economics programs and how they compare to your personal and professional goals.

What Is Economics?

At its core, economics is the study of how individuals, groups, and nations manage and use resources.

Economics can be broken down into microeconomics , which examines individual decisions, and macroeconomics , which is concerned with the economy as a whole. Both types of economics utilize historical trends and current conditions to inform business decision-making and make predictions of how markets will behave in the future.

Why Is Studying Economics Important?

Students who choose to study economics not only gain the skills needed to understand complex markets but come away with strong analytical and problem-solving skills, as well as the business acumen necessary to succeed in the professional world.

In fact, economics can be useful for professionals in all industries and aspects of daily life, not just in business.

Access your free e-book today.

7 Reasons to Study Economics

Here’s a look at seven advantages of studying economics and how it can benefit both your organization and career.

1. You'll Expand Your Vocabulary

Whether it’s scarcity (limited resources), opportunity cost (what must be given up to obtain something else), or equilibrium (the price at which demand equals supply), an economics course will give you fluency in fundamental terms needed to understand how markets work. Even if you don’t use these words often in your current role, studying these economic terms will give you a better understanding of market dynamics as a whole and how they apply to your organization.

2. You’ll Put New Terms into Practice

Economics isn’t just learning a set of technical words, it’s actually using them to develop a viable business strategy . Once you understand the terms, it’s easier to use theories and frameworks, like Porter’s Five Forces and SWOT analyses, to assess situations and make a variety of economic decisions for your organization. For example, many companies need to decide whether to pursue a bundled or unbundled pricing model or strategize for the best ways to maximize revenue .

3. You’ll Understand Your Own Spending Habits

Economics will teach you about how your organization and its market behaves, but also offer insights into your own spending habits and values. For example, Willingness to Pay (WTP) is the maximum amount someone is willing to pay for a good or service. There’s frequently a gap between hypothetical and actual WTP, and learning about it can help you decode your own behavior and enable you to make wiser financial decisions.

Demand curve; width: 50px; align: right;

For Shamari Benton, the concepts he learned in Economics for Managers opened his eyes to how everyday decisions are infused with economic calculations and principles.

“A simple grocery store visit becomes filled with economic references and analytical ponders,” Benton says.

4. You’ll Master the Nuances of the Field

Many people think of economics as just curves, models, and relationships , but in reality, economics is much more nuanced. Much of economic theory is based on assumptions of how people behave rationally, but it’s important to know what to do when those assumptions fail. Learning about cognitive biases that affect our economic decision-making processes arms you with the tools to predict human behavior in the real world, whether people act rationally or irrationally.

5. You’ll Learn How to Leverage Economic Tools

Learning economic theory is one thing, but developing the tools to make business decisions is another. Economics will teach you the basics and also give you concrete tools for analysis. For example, conjoint analysis is a statistical approach to measuring consumer demand for specific product features. This tool will allow you to get at the surprisingly complicated feature versus price tradeoffs that consumers make every day.

For example, imagine you work for Apple Inc. and you want to know what part of the iPhone should improve: Battery life, screen size, or camera. A conjoint analysis will let you know which improvements customers care about and which are worth the company’s time and money.

6. You’ll Be Better-Prepared for Graduate School

In addition to helping you make better decisions in both your personal and professional life, learning economics is also beneficial if you’re considering a graduate business degree. Studying economics can equip you with the problem-solving skills and technical knowledge needed to prepare for an MBA .

An MBA typically includes courses in finance, accounting, management, marketing, and economics, so if you decide an MBA is right for you, you’ll already be one step ahead. Furthermore, a foundational knowledge of economics enables you to use economic theories and frameworks to decide if graduate school is worth the financial investment.

7. You’ll Improve Your Career Prospects

An education in economics can improve your employability in a variety of industries. According to the World Economic Forum's Future of Jobs Report , analytical thinking and complex problem-solving skills top the list of transferable skills that employers will find increasingly important by 2025, both of which can be gained by studying economics.

In addition, many careers require knowledge of economic concepts, models, and relationships. Some possible career paths for economics students include finance, banking, insurance, politics, and healthcare administration . You’ll also be able to further your career in your current industry, as an understanding of the economics that power your industry can help you to be more effective in your role.

A Guide to Advancing Your Career with Essentials Business Skills | Access Your Free E-Book | Download Now

Options for Studying Economics

There are many options available for those looking to pursue an education in economics. Depending on your personal and professional goals, your current stage in life, and other important factors, you may choose to pursue an undergraduate or graduate degree in economics or take an online economics course to expand your future career opportunities.

Whether you're new to the business world or an experienced manager, having a thorough understanding of how markets work, pricing strategy, and consumer behavior is essential to success.

Do you want to take your career to the next level? Explore our eight-week online course Economics for Managers or other business essentials courses to learn how to apply economic principles to business decisions.

This post was updated on June 8, 2022. It was originally published on November 30, 2017.

essay on why i like economics

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Why I Want You to Study Economics: Increasing Diversity, Inclusion, and Opportunity in Economics

I thank the organizers of this year's LEED program and Professor Fidelis Ikem, the dean of the College of Business, for inviting me to speak today. I am proud of the relationship that the Federal Reserve Bank of Cleveland is building with Central State University. It's great to be on campus today, where one feels a real sense of history. At the Federal Reserve, we are proud of the fact that while the first two attempts at central banks in the U.S. lasted only 20 years each, the Fed is in its 105th year. But Central State is even older. Founded in 1887, the university recently celebrated its 131st birthday. Central State's designation as a historically black college and its focus on providing a high-quality academic experience to all students are things to be proud of. They make this university a very good place for me to speak about the benefits of an education in economics and the importance of diversity in the field of economics. Before I continue, I should remind everyone that the views I'll present today are my own and not necessarily those of the Federal Reserve System or my colleagues on the Federal Open Market Committee.

Why Study Economics

I didn't start out to be an economist. I majored in mathematics at Barnard College but also pursued a second major in economics because it seemed interesting and didn't require much additional course work. I applied to graduate school in math but ended up in the economics Ph.D. program at Princeton because two professors there wrote me letters explaining that Princeton's economics program was very mathematical and encouraging me to come there and study economics. I've always thought that I lucked into economics. It has provided me with a fascinating career, and I hope that at least in a small way I've been able to provide some good in return through economic research and policymaking.

Merriam-Webster defines economics as "a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services." Well, that's fine as far as it goes, but it sounds kind of dry. Others think of economics as a path to running a business or working in finance. That's also fine as far as it goes, but it is too limited a view. Instead, I like to think of economics as a social science that helps us think about how people use scarce resources, interact in markets or in other economic settings, respond to incentives, and make trade-offs. The fact that economics is a social science, one that involves people and their choices, makes economics complicated but also very interesting.

Because economics provides a rigorous way of thinking about trade-offs, incentives, and costs and benefits, it has many real-world applications. It can help a company be more profitable but it can also help policymakers formulate better public policies that affect people's lives. It can help us analyze the distribution of income across individuals, regions, and countries, and the causes for those differences. It can help us understand how a small financial shock might be propagated economy-wide or even globally, and what can be done to prevent such contagion. It can help us understand the issues facing people in or entering the workforce and provide evidence on which programs are most effective at helping them finance their education, develop new skills, and manage the changing job landscape driven by technological innovation. Economics can help us understand how people make financial decisions and how simple changes can result in better outcomes. For example, a simple change from making employees have to opt out of a company's savings plan, rather than opt in, can result in higher participation in the plan. 1 One well-formulated study of a Fortune 500 company's 401(k) savings plan found that switching to automatic enrollment increased employee participation from 49 percent to 86 percent. It also found that employees' savings decisions tend to be inert, so the default contribution rate and fund allocation are important features to consider in designing such a plan.

A default rule like this is an example of what behavioral economists call a nudge—something that isn't mandated but points people in the right direction and can change behavior. 2 Richard Thaler, an economics professor at the University of Chicago, won a Nobel Prize last year for his foundational work in behavioral economics, which combines aspects of psychology with economics. In his Nobel Prize lunch lecture, he mentioned that good work is being done around the world to, and I quote: "design and test scientifically informed policies that are working. People are being helped to save more for retirement, more poor kids—especially girls—are going to school, peasant farmers are retrieving more reliable harvests, and we are all being successfully nudged to use less energy." 3 That passage lists just a few of the areas in which economics is having a real-world impact and doing some good. In the policy realm, economics helps guide decisions about the country's monetary and fiscal policies, but also policies on health care, education, and trade. It helps in the design and evaluation of programs at the local community level too, including workforce development and transportation policy. In a nutshell, I believe that economics helps society.

I hope this piques your interest in studying economics. But if you need more convincing, you might want to know that economics offers a very good return on your education dollar. The ability to think critically, analyze a problem systematically, and deal with ambiguity are all skills developed through the study of economics and they are all skills highly valued in the job market. One recent study found that those with a bachelor's degree in economics earn about 20 percent more than graduates with degrees in other fields. 4 Some of the salary differences reflect the fact that economics majors have access to a wide variety of occupations, many of which are higher-paying. You'll find people with economics degrees employed in many sectors, including education, accounting, law, business, finance, and government. The Federal Reserve System—the 12 Reserve Banks and the Board of Governors—employs about 700 Ph.D. economists and also many others with undergraduate and master's degrees in economics, and I can tell you from experience that the Fed is a very productive and fascinating place to work.

The State of Diversity in Economics

The good news is that economics is a popular major in U.S. colleges and universities. In 2016, U.S. postsecondary schools awarded about 33,500 bachelor's degrees in economics. 5 While this represents less than 2 percent of all bachelor's degrees awarded by these schools, at the top 100 universities and top 100 liberal arts colleges without an undergraduate business major, about 10 to 20 percent of male undergraduates major in economics. 6 That's a high number when you consider how many different majors there are. But despite its popularity, the field has had less success in attracting women or historically under-represented racial and ethnic minorities. 7 While there has been some improvement compared to the 1970s, this under-representation has been going on for many years.

Using U.S. Department of Education data on four-year, non-profit colleges and universities over 2011-2015, Bayer and Wilcox found that while women earned more than half of all bachelor's degrees awarded across all fields, they earned less than a third of the bachelor's degrees in economics. 8 And the numbers are lower for under-represented minorities, who earned slightly more than 20 percent of bachelor's degrees and about 11 percent of economics degrees awarded. If you think about this in terms of the share of female graduates who choose to major in economics and the share of male graduates who choose to major in economics, according to Bayer and Wilcox's numbers, there is one female economics major for every 100 female bachelor's degrees compared to about three male economics majors for every 100 male bachelor's degrees. That means women are choosing to major in economics at only a third of the rate of men. 9 Similarly, minorities are choosing economics over other majors at only about half the rate of white students.

While you don't need to have majored in economics to enter a Ph.D. program in economics, it is a natural path. So given the under-representation of women and minorities at the undergraduate level, it is probably not surprising they are also under-represented at the Ph.D. level and in academia. The good news is that representation of women among the ranks of academia, from first-year graduate student through full professor, is higher now than in 1970. 10 The bad news is that progress has slowed. In 2017, females made up 32 percent of first-year grad students in economics compared to 30 percent in 1997. Almost a third of the new doctorates in 2017 were awarded to women, but gender diversity falls as one moves up the academic ranks. Women make up less than 30 percent of assistant professors, about 23 percent of tenured associates, and about 14 percent of full professors in economics. Unless there is a pickup in entry into graduate school, it is hard to see how these numbers can increase.

Analysis of minority representation in graduate economics is complicated a bit by the fact that almost 60 percent of doctorates awarded in economics are awarded to nonpermanent resident students. Some of these graduates return to their own countries, while others stay in the U.S. Restricting attention to U.S. citizens and permanent residents, of the 479 economics doctorates awarded in 2016, only 48, that is, 10 percent, were awarded to under-represented minorities: 15 were earned by African Americans and 33 by Hispanics or Latinos. 11 In the academic professorial ranks, under-represented minorities make up less than 10 percent of assistant professors and less than 5 percent of full professors.

There has been some progress: the percentages of undergraduate and graduate degrees awarded to minorities have increased over the past two decades. But the rate of change has been slower than the growth of the minority population in the U.S. and slower than the growth of minority representation across all fields and in the STEM fields of science, technology, engineering, and math. Indeed, minorities earn a greater share of the degrees awarded in the STEM fields than they do in economics. 12 Similarly, the representation of women in the STEM fields is also now higher than it is in economics. 13

Why Isn't Economics Diverse and Why Does It Matter?

An interesting question is why women and minorities are under-represented in economics. One potential explanation is the lack of role models in the field. Seeing someone of the same race or gender being successful in a field can be validating, and having someone like you to run ideas by or get advice from can be very helpful. So, the relative lack of women and minorities in economics could be perpetuating under-representation. This is a plausible explanation but it may be only one piece of the puzzle, as the empirical evidence on role models is somewhat mixed. 14 One study of a selective liberal arts college that essentially involved random assignment of students to instructors found that having an instructor of the same gender didn't increase the probability of a student taking more classes or majoring in the field, regardless of the gender distribution in the department, but it was associated with the student earning a higher grade in fields dominated by the opposite gender. 15 That is, female students received higher average grades from female instructors when taking courses in fields dominated by men (such as economics)—the difference was on the order of moving from a B-minus to a B. And there was a similar effect for males, who received higher average grades from male instructors when taking courses in female-dominated fields (such as education). A separate study in a different setting found evidence that such grade differentials reflected achievement differentials and not just inflated grading. 16 So the availability of role models appears to positively affect student achievement, but a lack of role models isn't the whole story about why some students choose not to continue in economics.

What about different preferences at the time students enroll? It is true that males are more likely than females to list economics as their planned major when accepted at college. But this gender difference for incoming students is not the full story because research that looks at the progression of students through the major has found that female students are relatively more likely to drop out of the major and switch to another field compared to male students. For example, one study found that women need to do well in their principles of economics course in order to continue in the major, and that's less true of men. 17

Other hypotheses have to do with the way economics is taught or with the content of the courses. Do large lecture classes, often found in introductory economics programs at large universities, turn off women and minorities more than men? Do the topics incorporated into the intro courses appeal to one group and not another? And, if so, how could the content be amended so that all students, regardless of race, ethnicity, or gender, feel included and take up the opportunity to be an economics major? Could it be that implicit biases come to play at each stage of the academic ladder, as has been shown in other types of settings?

As a college math major, I am happy to say that the theory that women may be more turned off by the heavy mathematical content in economics does not pan out. In fact, women earn over 40 percent of bachelor's degrees in math and statistics, a higher share than in economics; 18 women do well in math at the high school level; women are selecting other fields that are very quantitative, like psychology; and studies indicate that math aptitude doesn't explain gender differences in participation in upper-level economics courses. 19

So there are several different theories being explored, and I suspect that, at the end of the day, there are multiple drivers of the under-representation of women and minorities in the field of economics. But you might ask: why should we care? Shouldn't students be able to choose their field of study and career path? The low level of diversity in economics may just reflect people's preferences. That's a possibility, but if that's the case, then it is incumbent upon those of us in the field and upon educators to ensure that students can make informed choices and that they understand the value of an economics degree to the individual and to society.

Moreover, because economics is a field that influences policy, and policy affects all kinds of people, it's important to have diverse views inform that policy. As a public servant and Fed policymaker, I believe that policymakers need to consider the effects of our monetary, regulatory, and payments policies on all our constituents. In addition, I have seen firsthand how having a diversity of views expressed and discussed around the table can actually lead to better policy decisions, and there is actual research to back this up. Group dynamics are different when teams are diverse. Participants don't necessarily find it as comfortable to serve on a diverse team, but the diversity helps to avoid group-think. Diverse teams tend to be more objective and focus on the facts when making decisions; they may process information more carefully because they are forced to confront a different way of thinking and convince those with alternative views; and firms with more diversity tend to be more innovative. 20 Research also shows that firms with diverse management tend to have above-average earnings 21 Perhaps the better decision-making and innovation associated with diversity is showing up on the bottom line.

Beyond current policy and business outcomes, another reason I'd like to see more diversity in the field of economics is so the field itself doesn't get stymied by group-think. To expand our knowledge, economics needs to continually take on new research questions and develop innovative techniques and ways of analysis to arrive at answers to these questions. Broader representation in economics means a broader set of issues will be tackled and a broader set of research disseminated, resulting in better policy outcomes that will improve the economic well being of a greater share of the population.

Some Things Are Being Done

The American Economic Association, through its Committees on the Status of Women and the Status of Minority Groups in the Economics Profession, is taking a close look at diversity in the economics profession and is offering programs and resources aimed at increasing diversity at all levels. The association provides information to students who want to pursue careers or a graduate degree in economics, and also provides lesson plans to teachers. It offers a summer training and scholarship program to help prepare students for graduate school and, with the National Science Foundation, offers a Summer Economics Fellows Program, which is designed to increase the participation and advancement of women and under-represented minorities in economics.

I serve on the board of the Council for Economic Education. This nonprofit organization's mission is to educate students in kindergarten through high school about economics and personal finance so they can make better decisions for themselves, their families, and their communities. The council provides many materials to teachers and also runs the National Economics Challenge, a quiz bowl competition, which reaches a wide population of students in terms of gender, race, and income. Last year, over 11,000 high school students participated in the challenge; of these, 42 percent were girls and 22 percent were under-represented minorities, and participation from these groups has been increasing over time. A recent survey found that participants' performance on advanced placement exams exceeds the national average, with especially strong gains shown by female and minority students, and that participants are more likely than nonparticipants to choose to major in economics.

At the Cleveland Fed, we strive for excellence in all that we do. And that means we are taking actions to foster a culture that champions diversity, inclusion, and opportunity throughout the organization. To increase our ability to recruit high-quality talent in a variety of positions, including banking, computer programming, data science, accounting, as well as economics, we are developing relationships with schools in our District, including Central State. Last June, we hosted a number of Central State students and several faculty members as part of your school's eight-week summer Banking Institute program, and we will host another group of CSU students again next month. You may have attended one of the guest lectures that some of our economists have given in your economics and business classes, and representatives are here today to tell you about paid internships and other employment opportunities at the Cleveland Fed. As a contribution to strengthening the pipeline of future economists, the Cleveland Fed will be hosting a workshop this summer for the research assistants across the Federal Reserve System to help them prepare for graduate school. The Cleveland Fed has also been promoting pre- and post-college education. Our Learning Center distributes lesson plans on economics and financial literacy to teachers in kindergarten through high school, and our Money Museum, which is open to the public, offers interactive exhibits on the financial system and the economy. These may be small steps, but economics can help solve many real-world problems while providing individuals with a rewarding career, and we want to ensure that the widest group of people enter the field.

Fifty years ago today, this country lost a great leader, Dr. Martin Luther King, Jr. The tragedy of his death must not overshadow his many accomplishments and the lessons conveyed by his words and deeds. As I've discussed, there has been some progress over the past 50 years in increasing diversity, inclusiveness, and opportunity within the economics profession, but that progress has been slow. It is easy to get discouraged and accept the status quo. But we all must remember a key lesson from Dr. King's legacy: changing institutions is hard work and takes time. It must be met by perseverance and endurance. As a member of the economics profession, I will continue to seek ways to increase diversity, inclusion, and opportunity because I believe it will strengthen economic research and policymaking, and thereby help promote a healthier economy for a wider group of people. I encourage the students of Central State University to enter the field of economics and to join me in that mission.

  • See Chetty, et al. (2017). Return to 1
  • For accessible descriptions and examples of nudging, see Committee for the Prize in Economic Sciences in Memory of Alfred Nobel (2017), Thaler (2017a), and Sunstein (2017). Return to 2
  • Thaler (2017b). Return to 3
  • Carroll, et al. (2014). Return to 4
  • The data on the number and proportion of bachelor's degrees in economics in U.S. postgraduate institutions are derived from Tables 325.92 and 322.10 from U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System (IPEDS). Return to 5
  • Goldin (2013, 2015). Return to 6
  • The U.S. Department of Education's Integrated Postsecondary Education Data System (IPEDS) classifies as historically under-represented minorities members of the following groups: Hispanic or Latino (non-Hispanic), (non-Hispanic) Black or African American, and American Indian or Native Alaskan. The IPEDS data are used by the American Economic Association's Committee on the Status of Minority Groups in the Economics Profession (CSMGEP) to assess minority representation in the field. Return to 7
  • Bayer and Wilcox (2017). Return to 8
  • Among schools in the top 100 that offer both business and economics degrees, regardless of gender, students prefer the business degree over economics, but women do so to a greater extent. See Goldin (2013, 2015). Return to 9
  • The statistics cited in this paragraph are the preliminary statistics for 2017 compiled by the American Economic Association's Committee on the Status of Women in the Economics Profession. See Lundberg (2017). Return to 10
  • These statistics are from the U.S. Department of Education IPEDS data as reported in Committee on the Status of Minority Groups in the Economics Profession (CSMGEP) (2017). Return to 11
  • Committee on the Status of Minority Groups in the Economics Profession (CSMGEP) (2017). Return to 12
  • Goldin (2013, 2015). Return to 13
  • Goldin (2013) and Griffith (2013). Return to 14
  • Griffith (2014). Return to 15
  • Carrell, et al. (2010). Return to 16
  • Goldin (2013, 2015) and Avilova and Goldin (2018). Return to 17
  • Table 325.65, U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System (IPEDS). Return to 18
  • See Goldin (2013), and Bayer and Rouse (2016). Return to 19
  • See Rock and Grant (2016). Return to 20
  • Rock and Grant (2016) cite a Credit Suisse analysis of 2,400 companies worldwide that found that organizations with at least one female board member had higher return on equity and higher net income growth than firms with no female board members. In addition, Hunt, et al. (2015) report on a McKinsey & Company analysis of 366 companies that found that those in the top quartile in terms of management's ethnic and racial diversity were 35 percent more likely to have financial returns above their industry mean, while those in the top quartile in terms of management's gender diversity were 15 percent more likely to have financial returns above their industry mean. Return to 21
  • Avilova, Tatyana, and Claudia Goldin, "What Can UWE Do for Economics?" National Bureau of Economic Research Working Paper 24189, January 2018. ( https://www.nber.org/papers/w24189.pdf )
  • Bayer, Amanda, and Cecilia Elena Rouse, "Diversity in the Economics Profession: A New Attack on an Old Problem," Journal of Economic Perspectives 30 (Fall 2016), pp. 221-242. ( https://doi.org/10.1257/jep.30.4.221 )
  • Bayer, Amanda, and David Wilcox, "The Unequal Distribution of Economic Education: A Report on the Race, Ethnicity, and Gender of Economics Majors at US Colleges and Universities," Finance and Economics Discussion Series 2017-105, Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, Washington, D.C. ( https://www.federalreserve.gov/econres/feds/files/2017105pap.pdf )
  • Carrell, Scott E., Marianne E. Page, and James E. West, "Sex and Science: How Professor Gender Perpetuates the Gender Gap," Quarterly Journal of Economics 125 (2010), pp. 1101-1144. ( https://doi.org/10.1162/qjec.2010.125.3.1101 )
  • Carroll, Thomas, Djeto Assane, and Jared Busker, "Why it Pays to Major in Economics," Journal of Economics Education 45 (2014), pp. 251-261. ( https://doi.org/10.1080/00220485.2014.917906 )
  • Chetty, Raj, John Friedman, Søren Leth-Petersen, Torben Nielsen, and Tore Olsen, "Active vs. Passive Decision and Crowd-Out in Retirement Savings Accounts: Evidence from Denmark," Quarterly Journal of Economics 129 (2017), pp 1141-1219. ( https://doi.org/10.1093/qje/qju013 )
  • Committee for the Prize in Economic Sciences in Memory of Alfred Nobel, "Scientific Background on the Sveriges Riksbank Prize in Economics in Memory of Alfred Nobel 2017, Richard H. Thaler: Integrating Economics with Psychology," October 9, 2017. ( https://www.nobelprize.org/uploads/2018/06/advanced-economicsciences2017-1.pdf )
  • Committee on the Status of Minority Groups in the Economics Profession, Annual Report, American Economic Association, December 2017. ( https://www.aeaweb.org/content/file?id=6592 )
  • Goldin, Claudia, "Notes on Women and the Economics Undergraduate Major," Newsletter of the Committee on the Status of Women in the Economics Profession (CSWEP) (Summer 2013), pp. 4-6, 15. ( https://www.aeaweb.org/content/file?id=570 )
  • Goldin, Claudia, "Gender and the Undergraduate Economics Major: Notes on the Undergraduate Economics Major at a Highly Selective Liberal Arts College," manuscript, April 12, 2015 (update of Goldin, Summer 2013).
  • Griffith, Amanda L., "The Importance of Role Models," Newsletter of the Committee on the Status of Women in the Economics Profession (CSWEP) (Summer 2013), pp. 9-10, 16. ( https://www.aeaweb.org/content/file?id=570 )
  • Griffith, Amanda L., "Faculty Gender in the College Classroom: Does it Matter for Achievement and Major Choice?" Southern Economic Journal 81 (2014), pp. 211-231. ( https://doi.org/10.4284/0038-4038-2012.100 )
  • Hunt, Vivian, Dennis Layton, and Sara Prince, "Why Diversity Matters," McKinsey & Company, January 2015. ( https://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters )
  • Lundberg, Shelly, "The 2017 Report of the Committee on the Status of Women in the Economics Profession," American Economic Association, December 6, 2017. ( https://www.aeaweb.org/content/file?id=6388 )
  • Rock, David, and Heidi Grant, "Why Diverse Teams Are Smarter," Harvard Business Review , November 4, 2016. ( https://hbr.org/2016/11/why-diverse-teams-are-smarter )
  • Sunstein, Cass R., "Nudging: A Very Short Guide," manuscript, September 22, 2017. ( http://www.tif.us.edu.pl/download/2015010893532Nudge_Sunstein.pdf )
  • Thaler, Richard H., "From Cashews to Nudges: The Evolution of Behavioral Economics," Nobel Prize Lecture slides, December 8, 2017a. ( https://www.nobelprize.org/uploads/2018/06/thaler-lecture-slides.pdf )
  • Thaler, Richard H., "Speech at the Nobel Banquet," December 10, 2017b. ( https://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2017/thaler-speech.html )
  • U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System (IPEDS), Digest of Education Statistics : 2016. ( https://nces.ed.gov/programs/digest/d16/index.asp )

Suggested Citation

Mester, Loretta J. 2018. “Why I Want You to Study Economics: Increasing Diversity, Inclusion, and Opportunity in Economics.” Speech, Leaders, Executives, Entrepreneurs and Directors (LEED) Program - Central State University College of Business - Wilberforce OH.

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What is an Economics Essay?

An economics essay is a written piece that explores economic theories, concepts, and their real-world applications. It involves analyzing economic issues, presenting arguments, and providing evidence to support ideas. 

The goal of an economics essay is to demonstrate an understanding of economic principles and the ability to critically evaluate economic topics.

Why Write an Economics Essay?

Writing an economics essay serves multiple purposes:

  • Demonstrate Understanding: Showcasing your comprehension of economic concepts and their practical applications.
  • Develop Critical Thinking: Cultivating analytical skills to evaluate economic issues from different perspectives.
  • Apply Theory to Real-World Contexts: Bridging the gap between economic theory and real-life scenarios.
  • Enhance Research and Analysis Skills: Improving abilities to gather and interpret economic data.
  • Prepare for Academic and Professional Pursuits: Building a foundation for success in future economics-related endeavors.

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If you’re wondering, ‘how do I write an economics essay?’, consulting an example essay might be a good option for you. Here are some economics essay examples:

Short Essay About Economics

Fiscal policy plays a crucial role in shaping economic conditions and promoting growth. During periods of economic downturn or recession, governments often resort to fiscal policy measures to stimulate the economy. This essay examines the significance of fiscal policy in economic stimulus, focusing on two key tools: government spending and taxation.

Government spending is a powerful instrument used to boost economic activity. When the economy experiences a slowdown, increased government expenditure can create a multiplier effect, stimulating demand and investment. By investing in infrastructure projects, education, healthcare, and other sectors, governments can create jobs, generate income, and spur private sector activity. This increased spending circulates money throughout the economy, leading to higher consumption and increased business investments. However, it is important for governments to strike a balance between short-term stimulus and long-term fiscal sustainability.

Taxation is another critical aspect of fiscal policy. During economic downturns, governments may employ tax cuts or incentives to encourage consumer spending and business investments. By reducing tax burdens on individuals and corporations, governments aim to increase disposable income and boost consumption. Lower taxes can also incentivize businesses to expand and invest in new ventures, leading to job creation and economic growth. However, it is essential for policymakers to consider the trade-off between short-term stimulus and long-term fiscal stability, ensuring that tax cuts are sustainable and do not result in excessive budget deficits.

In conclusion, fiscal policy serves as a valuable tool in stimulating economic growth and mitigating downturns. Through government spending and taxation measures, policymakers can influence aggregate demand, promote investment, and create a favorable economic environment. However, it is crucial for governments to implement these policies judiciously, considering the long-term implications and maintaining fiscal discipline. By effectively managing fiscal policy, governments can foster sustainable economic growth and improve overall welfare.

A Level Economics Essay Examples

Here is an essay on economics a level structure:

Globalization, characterized by the increasing interconnectedness of economies and societies worldwide, has brought about numerous benefits and challenges. One of the significant issues associated with globalization is its impact on income inequality. This essay explores the implications of globalization on income inequality, discussing both the positive and negative effects, and examining potential policy responses to address this issue.


Globalization has led to a rise in the demand for skilled workers in many sectors. As countries integrate into the global economy, they become more specialized and engage in activities that utilize their comparative advantages. This shift toward skill-intensive industries increases the demand for skilled labor, resulting in a skill premium where high-skilled workers earn higher wages compared to low-skilled workers. Consequently, income inequality may widen as those with the necessary skills benefit from globalization while those without face limited employment opportunities and stagnant wages.


Globalization has also led to labor market displacement and job polarization. Developing countries, attracted by lower labor costs, have become manufacturing hubs, leading to job losses in industries that cannot compete internationally. This displacement primarily affects low-skilled workers in developed economies. Moreover, advancements in technology and automation have further contributed to job polarization, where middle-skilled jobs are declining while high-skilled and low-skilled jobs expand. This trend exacerbates income inequality as middle-income earners face challenges in finding stable employment opportunities.


To address the implications of globalization on income inequality, policymakers can implement several strategies. Firstly, investing in education and skills development is crucial. By equipping individuals with the necessary skills for the evolving labor market, governments can reduce the skill gap and provide opportunities for upward mobility. Additionally, redistributive policies, such as progressive taxation and social welfare programs, can help mitigate income inequality by ensuring a more equitable distribution of resources. Furthermore, fostering inclusive growth and promoting entrepreneurship can create job opportunities and reduce dependency on traditional sectors vulnerable to globalization.

Globalization has had a profound impact on income inequality, posing challenges for policymakers. While it has facilitated economic growth and raised living standards in many countries, it has also exacerbated income disparities. By implementing effective policies that focus on education, skill development, redistribution, and inclusive growth, governments can strive to reduce income inequality and ensure that the benefits of globalization are more widely shared. It is essential to strike a balance between the opportunities offered by globalization and the need for social equity and inclusive development in an interconnected world.

Band 6 Economics Essay Examples

Government intervention in markets is a topic of ongoing debate in economics. While free markets are often considered efficient in allocating resources, there are instances where government intervention becomes necessary to address market failures and promote overall welfare. This essay examines the impact of government intervention on market efficiency, discussing the advantages and disadvantages of such interventions and assessing their effectiveness in achieving desired outcomes.


Government intervention can correct market failures that arise due to externalities, public goods, and imperfect competition. Externalities, such as pollution, can lead to inefficiencies as costs or benefits are not fully accounted for by market participants. By imposing regulations or taxes, the government can internalize these external costs and incentivize firms to adopt more socially responsible practices. Additionally, the provision of public goods, which are non-excludable and non-rivalrous, often requires government intervention as private markets may under provide them. By supplying public goods like infrastructure or national defense, the government ensures efficient allocation and benefits for society.


Information asymmetry, where one party has more information than another, can hinder market efficiency. This is particularly evident in markets with complex products or services, such as healthcare or financial services. Government intervention through regulations and oversight can enhance transparency, consumer protection, and market efficiency. For example, regulations that require companies to disclose accurate and standardized information empower consumers to make informed choices. Similarly, regulatory bodies in financial markets can enforce rules to mitigate risks and ensure fair and transparent transactions, promoting market efficiency.


While government intervention can address market failures, it can also create unintended consequences and distortions. Excessive regulations, price controls, or subsidies can result in inefficiencies and unintended outcomes. For instance, price ceilings may lead to shortages, while price floors can create surpluses. Moreover, government interventions can stifle innovation and competition by reducing incentives for private firms to invest and grow. Policymakers need to carefully design interventions to strike a balance between correcting market failures and avoiding excessive interference that hampers market efficiency.

Government intervention plays a crucial role in addressing market failures and promoting market efficiency. By correcting externalities, providing public goods and services, and reducing information asymmetry, governments can enhance overall welfare and ensure efficient resource allocation. However, policymakers must exercise caution to avoid unintended consequences and market distortions. Striking a balance between market forces and government intervention is crucial to harness the benefits of both, fostering a dynamic and efficient economy that serves the interests of society as a whole.

Here are some downloadable economics essays:

Economics essay pdf

Economics essay introduction

Economics Extended Essay Examples

In an economics extended essay, students have the opportunity to delve into a specific economic topic of interest. They are required to conduct an in-depth analysis of this topic and compile a lengthy essay. 

Here are some potential economics extended essay question examples:

  • How does foreign direct investment impact economic growth in developing countries?
  • What are the factors influencing consumer behavior and their effects on market demand for sustainable products?
  • To what extent does government intervention in the form of minimum wage policies affect employment levels and income inequality?
  • What are the economic consequences of implementing a carbon tax to combat climate change?
  • How does globalization influence income distribution and the wage gap in developed economies?

IB Economics Extended Essay Examples 

IB Economics Extended Essay Examples

Economics Extended Essay Topic Examples

Extended Essay Research Question Examples Economics

Tips for Writing an Economics Essay

Writing an economics essay requires specific expertise and skills. So, it's important to have some tips up your sleeve to make sure your essay is of high quality:

  • Start with a Clear Thesis Statement: It defines your essay's focus and argument. This statement should be concise, to the point, and present the crux of your essay.
  • Conduct Research and Gather Data: Collect facts and figures from reliable sources such as academic journals, government reports, and reputable news outlets. Use this data to support your arguments and analysis and compile a literature review.
  • Use Economic Theories and Models: These help you to support your arguments and provide a framework for your analysis. Make sure to clearly explain these theories and models so that the reader can follow your reasoning.
  • Analyze the Micro and Macro Aspects: Consider all angles of the topic. This means examining how the issue affects individuals, businesses, and the economy as a whole.
  • Use Real-World Examples: Practical examples and case studies help to illustrate your points. This can make your arguments more relatable and understandable.
  • Consider the Policy Implications: Take into account the impacts of your analysis. What are the potential solutions to the problem you're examining? How might different policies affect the outcomes you're discussing?
  • Use Graphs and Charts: These help to illustrate your data and analysis. These visual aids can help make your arguments more compelling and easier to understand.
  • Proofread and Edit: Make sure to proofread your essay carefully for grammar and spelling errors. In economics, precision and accuracy are essential, so errors can undermine the credibility of your analysis.

These tips can help make your essay writing journey a breeze. Tailor them to your topic to make sure you end with a well-researched and accurate economics essay.

To wrap it up , writing an economics essay requires a combination of solid research, analytical thinking, and effective communication. 

You can craft a compelling piece of work by taking our examples as a guide and following the tips.

However, if you are still questioning "how do I write an economics essay?", it's time to get professional help from the best essay writing service -  CollegeEssay.org.

Our economics essay writing service is always ready to help students like you. Our experienced economics essay writers are dedicated to delivering high-quality, custom-written essays that are 100% plagiarism free.

Also try out our AI essay writer and get your quality economics essay now!

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essay on why i like economics

1.1 What Is Economics, and Why Is It Important?

Learning objectives.

By the end of this section, you will be able to:

  • Discuss the importance of studying economics
  • Explain the relationship between production and division of labor
  • Evaluate the significance of scarcity

Economics is the study of how humans make decisions in the face of scarcity. These can be individual decisions, family decisions, business decisions or societal decisions. If you look around carefully, you will see that scarcity is a fact of life. Scarcity means that human wants for goods, services and resources exceed what is available. Resources, such as labor, tools, land, and raw materials are necessary to produce the goods and services we want but they exist in limited supply. Of course, the ultimate scarce resource is time- everyone, rich or poor, has just 24 expendable hours in the day to earn income to acquire goods and services, for leisure time, or for sleep. At any point in time, there is only a finite amount of resources available.

Think about it this way: In 2015 the labor force in the United States contained over 158 million workers, according to the U.S. Bureau of Labor Statistics. The total land area was 3,794,101 square miles. While these are certainly large numbers, they are not infinite. Because these resources are limited, so are the numbers of goods and services we produce with them. Combine this with the fact that human wants seem to be virtually infinite, and you can see why scarcity is a problem.

Introduction to FRED

Data is very important in economics because it describes and measures the issues and problems that economics seek to understand. A variety of government agencies publish economic and social data. For this course, we will generally use data from the St. Louis Federal Reserve Bank's FRED database. FRED is very user friendly. It allows you to display data in tables or charts, and you can easily download it into spreadsheet form if you want to use the data for other purposes. The FRED website includes data on nearly 400,000 domestic and international variables over time, in the following broad categories:

  • Money, Banking & Finance
  • Population, Employment, & Labor Markets (including Income Distribution)
  • National Accounts (Gross Domestic Product & its components), Flow of Funds, and International Accounts
  • Production & Business Activity (including Business Cycles)
  • Prices & Inflation (including the Consumer Price Index, the Producer Price Index, and the Employment Cost Index)
  • International Data from other nations
  • U.S. Regional Data
  • Academic Data (including Penn World Tables & NBER Macrohistory database)

For more information about how to use FRED, see the variety of videos on YouTube starting with this introduction.

If you still do not believe that scarcity is a problem, consider the following: Does everyone require food to eat? Does everyone need a decent place to live? Does everyone have access to healthcare? In every country in the world, there are people who are hungry, homeless (for example, those who call park benches their beds, as Figure 1.2 shows), and in need of healthcare, just to focus on a few critical goods and services. Why is this the case? It is because of scarcity. Let’s delve into the concept of scarcity a little deeper, because it is crucial to understanding economics.

The Problem of Scarcity

Think about all the things you consume: food, shelter, clothing, transportation, healthcare, and entertainment. How do you acquire those items? You do not produce them yourself. You buy them. How do you afford the things you buy? You work for pay. If you do not, someone else does on your behalf. Yet most of us never have enough income to buy all the things we want. This is because of scarcity. So how do we solve it?

Visit this website to read about how the United States is dealing with scarcity in resources.

Every society, at every level, must make choices about how to use its resources. Families must decide whether to spend their money on a new car or a fancy vacation. Towns must choose whether to put more of the budget into police and fire protection or into the school system. Nations must decide whether to devote more funds to national defense or to protecting the environment. In most cases, there just isn’t enough money in the budget to do everything. How do we use our limited resources the best way possible, that is, to obtain the most goods and services we can? There are a couple of options. First, we could each produce everything we each consume. Alternatively, we could each produce some of what we want to consume, and “trade” for the rest of what we want. Let’s explore these options. Why do we not each just produce all of the things we consume? Think back to pioneer days, when individuals knew how to do so much more than we do today, from building their homes, to growing their crops, to hunting for food, to repairing their equipment. Most of us do not know how to do all—or any—of those things, but it is not because we could not learn. Rather, we do not have to. The reason why is something called the division and specialization of labor , a production innovation first put forth by Adam Smith ( Figure 1.3 ) in his book, The Wealth of Nations .

The Division of and Specialization of Labor

The formal study of economics began when Adam Smith (1723–1790) published his famous book The Wealth of Nations in 1776. Many authors had written on economics in the centuries before Smith, but he was the first to address the subject in a comprehensive way. In the first chapter, Smith introduces the concept of division of labor , which means that the way one produces a good or service is divided into a number of tasks that different workers perform, instead of all the tasks being done by the same person.

To illustrate division of labor, Smith counted how many tasks went into making a pin: drawing out a piece of wire, cutting it to the right length, straightening it, putting a head on one end and a point on the other, and packaging pins for sale, to name just a few. Smith counted 18 distinct tasks that different people performed—all for a pin, believe it or not!

Modern businesses divide tasks as well. Even a relatively simple business like a restaurant divides the task of serving meals into a range of jobs like top chef, sous chefs, less-skilled kitchen help, servers to wait on the tables, a greeter at the door, janitors to clean up, and a business manager to handle paychecks and bills—not to mention the economic connections a restaurant has with suppliers of food, furniture, kitchen equipment, and the building where it is located. A complex business like a large manufacturing factory, such as the shoe factory ( Figure 1.4 ), or a hospital can have hundreds of job classifications.

Why the Division of Labor Increases Production

When we divide and subdivide the tasks involved with producing a good or service, workers and businesses can produce a greater quantity of output. In his observations of pin factories, Smith noticed that one worker alone might make 20 pins in a day, but that a small business of 10 workers (some of whom would need to complete two or three of the 18 tasks involved with pin-making), could make 48,000 pins in a day. How can a group of workers, each specializing in certain tasks, produce so much more than the same number of workers who try to produce the entire good or service by themselves? Smith offered three reasons.

First, specialization in a particular small job allows workers to focus on the parts of the production process where they have an advantage. (In later chapters, we will develop this idea by discussing comparative advantage .) People have different skills, talents, and interests, so they will be better at some jobs than at others. The particular advantages may be based on educational choices, which are in turn shaped by interests and talents. Only those with medical degrees qualify to become doctors, for instance. For some goods, geography affects specialization. For example, it is easier to be a wheat farmer in North Dakota than in Florida, but easier to run a tourist hotel in Florida than in North Dakota. If you live in or near a big city, it is easier to attract enough customers to operate a successful dry cleaning business or movie theater than if you live in a sparsely populated rural area. Whatever the reason, if people specialize in the production of what they do best, they will be more effective than if they produce a combination of things, some of which they are good at and some of which they are not.

Second, workers who specialize in certain tasks often learn to produce more quickly and with higher quality. This pattern holds true for many workers, including assembly line laborers who build cars, stylists who cut hair, and doctors who perform heart surgery. In fact, specialized workers often know their jobs well enough to suggest innovative ways to do their work faster and better.

A similar pattern often operates within businesses. In many cases, a business that focuses on one or a few products (sometimes called its “ core competency ”) is more successful than firms that try to make a wide range of products.

Third, specialization allows businesses to take advantage of economies of scale , which means that for many goods, as the level of production increases, the average cost of producing each individual unit declines. For example, if a factory produces only 100 cars per year, each car will be quite expensive to make on average. However, if a factory produces 50,000 cars each year, then it can set up an assembly line with huge machines and workers performing specialized tasks, and the average cost of production per car will be lower. The ultimate result of workers who can focus on their preferences and talents, learn to do their specialized jobs better, and work in larger organizations is that society as a whole can produce and consume far more than if each person tried to produce all of their own goods and services. The division and specialization of labor has been a force against the problem of scarcity.

Trade and Markets

Specialization only makes sense, though, if workers can use the pay they receive for doing their jobs to purchase the other goods and services that they need. In short, specialization requires trade.

You do not have to know anything about electronics or sound systems to play music—you just buy an iPod or MP3 player, download the music, and listen. You do not have to know anything about artificial fibers or the construction of sewing machines if you need a jacket—you just buy the jacket and wear it. You do not need to know anything about internal combustion engines to operate a car—you just get in and drive. Instead of trying to acquire all the knowledge and skills involved in producing all of the goods and services that you wish to consume, the market allows you to learn a specialized set of skills and then use the pay you receive to buy the goods and services you need or want. This is how our modern society has evolved into a strong economy.

Why Study Economics?

Now that you have an overview on what economics studies, let’s quickly discuss why you are right to study it. Economics is not primarily a collection of facts to memorize, although there are plenty of important concepts to learn. Instead, think of economics as a collection of questions to answer or puzzles to work. Most importantly, economics provides the tools to solve those puzzles.

Consider the complex and critical issue of education barriers on national and regional levels, which affect millions of people and result in widespread poverty and inequality. Governments, aid organizations, and wealthy individuals spend billions of dollars each year trying to address these issues. Nations announce the revitalization of their education programs; tech companies donate devices and infrastructure, and celebrities and charities build schools and sponsor students. Yet the problems remain, sometimes almost as pronounced as they were before the intervention. Why is that the case? In 2019, three economists—Esther Duflo, Abhijit Banerjee, and Michael Kremer—were awarded the Nobel Prize for their work to answer those questions. They worked diligently to break the widespread problems into smaller pieces, and experimented with small interventions to test success. The award citation credited their work with giving the world better tools and information to address poverty and improve education. Esther Duflo, who is the youngest person and second woman to win the Nobel Prize in Economics, said, "We believed that like the war on cancer, the war on poverty was not going to be won in one major battle, but in a series of small triumphs. . . . This work and the culture of learning that it fostered in governments has led to real improvement in the lives of hundreds of millions of poor people.”

As you can see, economics affects far more than business. For example:

  • Virtually every major problem facing the world today, from global warming, to world poverty, to the conflicts in Syria, Afghanistan, and Somalia, has an economic dimension. If you are going to be part of solving those problems, you need to be able to understand them. Economics is crucial.
  • It is hard to overstate the importance of economics to good citizenship. You need to be able to vote intelligently on budgets, regulations, and laws in general. When the U.S. government came close to a standstill at the end of 2012 due to the “fiscal cliff,” what were the issues? Did you know?
  • A basic understanding of economics makes you a well-rounded thinker. When you read articles about economic issues, you will understand and be able to evaluate the writer’s argument. When you hear classmates, co-workers, or political candidates talking about economics, you will be able to distinguish between common sense and nonsense. You will find new ways of thinking about current events and about personal and business decisions, as well as current events and politics.

The study of economics does not dictate the answers, but it can illuminate the different choices.

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How to Write a Good Economics Essay

Governor November 28, 2019 Real World Applications 3 Comments

Many students ask “How to write an economics essay?” This Guide to Writing a Good Economics Essay is applicable to both IB economics as well as the Singapore JC A-Level H2 economics examinations. Many of the pointers here are also applicable to large-mark case study questions.

6 Steps to Writing a Good Economics Essay

Step 1: dissect the question.

Make sure you analyse and fully understand the KEYWORDS and REQUIREMENTS of the question. This is a very important skill that is taught in our economics tuition classes .

For example, “Best”, “Most Effective” are closely related but mean different things.

Paraphrase the question to make it simpler if necessary.

Take note of the command word (eg: Explain, Discuss) as it determines the approach needed for the essay, for example, whether two sides are needed or one side is sufficient. Below are some common examples found in economics essay questions:

Command Words                                      Action Required

Account for                                                 Explain why

Analyse                                                        Break it down into step-by-step explanations

Assess                                                          For & Against. Consider other factors.

Compare                                                      Identify Similarities & Differences

Distinguish                                                   Point out differences

Discuss                                                        Explore both sides

Evaluate                                                       The Good and The Bad.

Explain                                                          Show why and how

Explain whether                                            Cover both possibilities

Examine                                                        Look closely. How so and how not so?

To What Extent                                              Yes…..But….Judgment

Remember to look out for the context in the question. This is usually given in the form of a country (eg: Singapore). The examples in your essay must be tailored to this particular context (for example, do not suggest interest rate policy for Singapore as that is considered infeasible in the Singapore context). If no context is given, any real-world example can be used.

Keep in mind the question throughout the essay and remember to always answer the question. Don’t go off-point!

Common Examiner’s Comment :  Not Answering Question (NAQ))

Step 2: Plan Your Answer

Take some time to consider what economic framework you will use to approach the question. Scribble down your main thesis and anti-thesis points. Ensure they ANSWER THE QUESTION.

Step 3: Essay Introduction

In the introduction, include definitions of keywords in the question and spell out the economic framework you will employ for your answer as well as key definitions.

Step 4: Body of Essay

In the body , there will be several paragraphs. 

The number of points/paragraphs depends on the question. It is common to require 2 main points for each 10 mark essay and similarly for 15 mark essay questions. Under each main point, there may be 1-2 sub-points.

Use one paragraph for each sub-point you are making.

However, do not be too focussed on the number of points or paragraphs. The key is to answer the question.

For each body paragraph , use TET’s PEEL(ED) structure. Include only one main idea per paragraph.

  • Point – Write your point in the first sentence so that markers will know what the paragraph will be about. The topic sentence must directly answer the question!
  • Explanation – Explain what you mean
  • Elaboration – Provide further analysis with clear step-by-step economic reasoning. This part may be done with examples as well as diagrams.
  • Link – Link your explanations back to the Point and to answer the question.
  • Exemplification – Give an example to support your reasoning. It can be statistics or real-world examples (for Case Studies, evidences from the Case must be uncovered!)
  • Diagram – Where possible, araw an appropriate diagram with correct labelling and refer to it in your answer. This is crucial to show economic reasoning. Diagrams are very important for economics essays!

These are of course much easier said than done! Thus, students in our economics tuition classes are regularly honed to achieve such output including with tips and tricks to spark off the correct thinking process.

Our resources including the Study Guides for A Level and IB economics also provide a very powerful and handy reference on the depth of analysis required to score the highest marks.

Common Examiner’s Comment :  Mere statements and claims. No economic rigour.

Step 5: In-Body Evaluation

This applies especially to the 15 mark essays for A-Level Economics. A total of 5 marks is catered for Evaluation. Students should attempt to achieve about 2-3 in-body evaluation marks by pointing out how the thesis and anti-thesis points may not be true due to certain assumptions made that may not hold. Students may write “However,….may not necessarily happen……It would depend on whether….”. This statement can be written after the associated sub-point has been made.

Step 6: CONCLUDING SECTION

This only applies to the 15 mark essay questions.

Earn more evaluation marks by making a reasoned judgement. Deliver your verdict like a Judge! 

Check back on the question before you embark on this. Ensure your judgement answers the question.

So the question now is, how does a judge arrive at and deliver a verdict? Certainly, you should not be summarising or merely paraphrasing your main points in the conclusion. Obviously, you cannot expect more marks by saying the same thing over and over again!

After a verdict and reasons have been provided, consider providing further relevant insights and/or recommendations.

Common Examiner’s Comment :  Repetitive. Mere Summary.

Here are some quite common types of Concluding Sections 

  • Consider the relative importance of thesis and anti-thesis factors. Which factors are most important or pertinent in the given context? For example, certain policies better fit specifc types of economies.
  • Consider short-term vs long-term pros and cons. Do the short-term benefits outweigh the long-term costs? Is the policy more effective in the long-term, and if so, how pressing is the problem that needs to be addressed?
  • Suggest a multi-policy approach, in which each policy has strengths and weaknesses that allow them to complement each other.

There is no way to really memorise evaluation points as every question and context is different. After all, you are being tested on higher-order thinking!

There are other evaluation tips that our students will receive but the key point here is that the training of the mind to think and apply economics is essential. That is where our weekly economics lessons come into play and that is why our students are often asked questions in class and trained to think on their feet. As ex-student Xue Min from YIJC testified, Chief Tutor Mr. Kelvin Hong does not just spoon-feeds our students but mentors them in their thinking to arrive at the answers. This was different from other tutors that her classmates experienced and eventually this was the key to Xue Min’s A grade.

In your essay, write in simple and clear sentences. Everything you write should be value-adding. You do not have to spend time showing off vocabulary as no extra points are awarded for language. Focus on economic reasoning. Use succinct and effective examples which support the point you are trying to make as well as accurate diagrammatic analyses.

For samples of great economics essays, please check out our free Economics Model Essays and sample Past JC A-Level Economics Questions and Answers .

For our econs publications that are sold worldwide, please check out our A Level & IB Economics Study Guides and Model Essays Publications

About The Economics Tutor

Founded by Kelvin Hong in 1998, The Economics Tutor is one of the leading economics tuition in Singapore . We provide a comprehensive program to guide students in understanding complex economic concepts and applying them through case study analyses, essay writing and discussion of real world events.

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Why I Majored in Economics

Cameron greene '25.

Cameron Greene headshot

I arrived at Yale thinking I would major in Ethics, Politics, and Economics and eventually attend law school. I took coursework in Directed Studies, Russian language, and political theory.

Taking intro microeconomics in the summer before sophomore year with Professor Koker, I enjoyed learning about the behavior of rational agents, such as the need to weigh opportunity costs. The economist’s way of thinking resonated with me. By providing new motivation, economics rekindled my love of math. Since sophomore year I have worked as an economic research assistant through the Tobin program and individual hires in the School of Management, Jackson School, and ISPS. Junior year, I switched to the Economics major for the opportunities to work more closely with economics faculty and to take more quantitative economics coursework.

The community is intimate. It is easy to find classmates to work on psets with. I have discovered new interests through the structure of the major and the research interests of faculty. Entering my senior year, I am looking forward to the challenge of writing my thesis. I am grateful for the support I have received from faculty mentors.

Marcella Villagomez '24

Headshot of Marcella Villagomez

When I got to Yale, I planned to major in Computer Science and Economics. I knew I wanted to explore and develop empirical models and understand their implications.

I decided on switching to just Economics at the end of my Sophomore year. I found a deep interest in the high-level programming required of econometrics, and found that there were a multitude of careers I could pursue within that realm. I have always found an interest in Economics due to its unique ability to bring together the quantitative (via modeling) and the qualitative (consistently diving into why the model appears the way it does).

I have thoroughly appreciated my experience within the major. Given that there are relatively few major requirements, I had the opportunity to explore so many different applications within the real-world, such as trade, industrial organization, and healthcare.

Nicholas Trenholm '24

Headshot Nick Trenholm

In high school, I developed a very strong interest in government and politics. This led me to enter Yale planning to major in Ethics, Politics, and Economics – an interdisciplinary program that prepares you for a career in public policy.

My freshman year, I took classes in all three of the disciplines under the umbrella of the EP&E major. After completing two semesters, one thing was clear. I enjoyed my economics classes far more than the others. I loved the real world applicability, the basis in quantitative and observable fact, and the logical puzzles that economics problems present you with. Yale's economics department boasts the best faculty in the world who, while producing industry-leading research, take deep care and pride in teaching undergraduates. The department also gives students the chance to participate in and contribute to innovative research projects. I have had the opportunity to learn from such an amazing array of professors, such as William Nordhaus and Costas Meghir. With course flexibility and a wide variety of electives, you can truly make the major your own. I decided to major in economics because I am passionate about the subject and value the support given by the wonderful advisors, staff, and faculty in the department.

My experience as an economics major has been one of growth and excitement. The major's core classes provide students with an excellent foundational knowledge of economics. You will be challenged at times and rewarded for the learning experience you are taking part in. I love the freedom provided by the major so that each semester I can put together a class schedule that excites me. From game theory to personal finance, each class is an opportunity to improve your economic toolkit and engage with a new and interesting subject matter. In addition to the world-class professors, the teaching assistants and advisors in the economics department really define the major. They always go the extra mile to ensure students are having a positive, constructive learning experience. The overall economics community at Yale is supportive, collaborative, and dynamic. I would encourage all new students to explore economics at Yale.

Annie Lin '24

Annie Lin Headshot

I arrived at Yale in September 2020 planning to double major in Economics and Electrical Engineering.

I've known that Economics was my major for me since my Junior year of high school, and it was probably not for the reason why everyone else majored in Economics. I like Economics because I sucked at it - I simply could not understand how one could translate social behavior down to models and numbers on a piece of paper. I think the challenge of delving into a field so unfamiliar and knowing that I had to work harder to strengthen my knowledge and build the necessary quantitative skills drove me to enjoy the work as I began to see Economics' practical applications in real life. I worked to build my understanding of the principles of microeconomics and macroeconomics brick by brick until I had a solid foundation that allowed me to explore other fascinating areas, such as labor economics and behavioral finance, and decided that it was the major for me ever since then.

My experience as an economics major has been very fruitful, especially as a student of another STEM major (electrical engineering), I could combine complementary skills from both majors to further my understanding of underlying concepts from both majors. I've particularly enjoyed using my coding background to work on data-driven projects as a Tobin RA or creating a simple regression model for PSETs. The best part of being an Economics major is that you are hands-on with applying the theories you've learned in class to history or your own models while working with the most up-and-coming researchers in your field.

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How to Write a Good Economics Essay

Last Updated: March 7, 2023 References

This article was co-authored by Emily Listmann, MA . Emily Listmann is a Private Tutor and Life Coach in Santa Cruz, California. In 2018, she founded Mindful & Well, a natural healing and wellness coaching service. She has worked as a Social Studies Teacher, Curriculum Coordinator, and an SAT Prep Teacher. She received her MA in Education from the Stanford Graduate School of Education in 2014. Emily also received her Wellness Coach Certificate from Cornell University and completed the Mindfulness Training by Mindful Schools. This article has been viewed 128,550 times.

A good economics essay requires a clear argument that is well-supported by appropriately referenced evidence. Research your topic thoroughly and then carefully plan out your essay. A good structure is essential, as is sticking closely to the main essay question. Be sure to proofread your essay and try to write in formal and precise prose.

Preparing to Write Your Essay

Step 1 Read the question carefully.

  • For example a question such as “Discuss the macroeconomic consequences of rising house prices, alongside falling interest rates” could be divided into 2 parts: 1 part could be on the effects of rising prices, and 1 on the effects of falling interest rates.
  • In this example you could begin by discussing each separately and then bringing the 2 together and analysing how they influence each other.
  • Be sure to keep the question at the forefront of your mind and don’t veer off topic. [1] X Research source

Step 2 Research the topic thoroughly

  • Be sure that you understand all the key terms that you are being asked about.
  • Try to keep your reading focussed closely to the essay question.
  • Don’t forget to look at any lecture or class notes you have made.
  • 3 Come up with a thesis statement . A thesis statement is the main argument you will make in your essay. It should be 1-2 sentences long and respond to the essential question that’s being asked. The thesis will help you structure the body of your essay, and each point you make should relate back to the thesis.

Step 4 Plan out your content.

  • Once you have put together a list of key points, then try to add in some more detail that brings in elements from your research.
  • When you come to write out your essay, you can develop a paragraph based on each point.

Step 5 Think about your...

  • All of the evidence and explanation will be in the main body of the essay.
  • Order the key points in the body of your essay in such a way that they flow logically.
  • If you are writing a longer essay, you can break the main body into different sections. [2] X Research source
  • If you have a word limit, be sure to take this into account when you are planning.
  • Allocate yourself a rough number of words per section.
  • The introduction and conclusion can be just a paragraph each.

Writing the Essay

Step 1 Write the introduction...

  • What your essay is about.
  • What material you will cover in the essay.
  • What your argument is. [3] X Research source

Step 2 Outline your argument.

  • Having this stated clearly at the start can help you to stay focussed on the question as you work your way through the essay.
  • Try writing out this one or two sentence statement and sticking it up in front of you as you write, so it’s stays at the forefront of your mind.

Step 3 Write the body of the essay.

  • Try to begin each paragraph with a sentence that outlines what the paragraph will cover.
  • Look at the opening sentence of each paragraph and ask yourself if it is addressing the essay question. [5] X Research source

Step 4 Provide evidence for your argument.

  • Try to engage with arguments that run counter to yours, and use the evidence you have found to show the flaws.
  • It might help to imagine someone reading the essay, and anticipating the objections that he might raise.
  • Showing that you have thought about potential problems, and you can make an argument that overcomes them, is a hallmark of an excellent essay. [6] X Research source
  • If there is conflicting evidence, discuss it openly and try to show where the weight of the evidence lies. [7] X Research source
  • Don’t just ignore the evidence that runs counter to your argument.

Step 5 Write the conclusion...

  • In the conclusion you can add a few sentences that show how your essay could be developed and taken further.
  • Here you can assert why the question is important and make some tentative suggestions for further analysis.

Proofreading and Making Revisions

Step 1 Check for divergences away from the question.

  • As you read through it, think about how closely you stick to main overarching question.
  • If you notice paragraphs that drift off into other areas, you need to be tough and cut them out.
  • You have a limited number of words so it’s essential to make every one count by keeping tightly focussed on the main question.

Step 2 Assess the quality and depth of your argument.

  • Think about how you use the evidence too. Do you critically engage with it, or do you merely quote it to support your point?
  • A good analytical essay such discuss evidence critically at all times.
  • Even if the evidence supports your argument, you need to show that you have thought about the value of this particular piece of data.
  • Try to avoid making any assumptions, or writing as if something were beyond dispute. [10] X Research source

Step 3 Check spelling, grammar and style.

  • Remember an academic essay should be written in a formal style, so avoid colloquialisms.
  • Avoid contractions, such as “don’t”, or “won’t”.
  • Try to avoid paragraphs that are more than ten or fifteen lines long.
  • Think about how it looks on the page. [12] X Research source

Step 4 Check your referencing and bibliography.

  • Always include a bibliography, but don’t include references to things you haven’t read or didn’t inform your argument. [13] X Research source
  • Your teacher will know if you just add a load of titles into your bibliography that are not evidenced in the body of your essay.
  • Always follow the bibliography format used by your department or class.

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  • ↑ http://www.economicshelp.org/help/tips-economic-essays/
  • ↑ http://www.writing.utoronto.ca/advice/planning-and-organizing/organizing
  • ↑ http://carleton.ca/economics/courses/writing-preliminaries/academic-essay-writing/
  • ↑ https://www.economicsnetwork.ac.uk/archive/lse_writing/page_11.htm
  • ↑ http://homes.chass.utoronto.ca/~mcmillan/writing.pdf
  • ↑ https://www.royalholloway.ac.uk/economics/documents/pdf/essaywriting-departmentofeconomics.pdf

About This Article

Emily Listmann, MA

Before you begin writing your economics essay, make sure to carefully read the prompt so that you have a clear sense of the paper's purpose and scope. Once you have read the prompt, conduct research using your textbook and relevant articles. If you cannot find research materials, ask your instructor for recommendations. After your research is done, construct a 1-2 sentence thesis statement and begin outlining your main ideas so that your essay will have a clear structure. Make sure to leave time to write a draft and revise your work before it is due. If you want to learn more, like how to cite the sources you used for your essay, keep reading the article! Did this summary help you? Yes No

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Top 5 reasons to study economics

essay on why i like economics

Learnings & Academics

Studying economics is more than understanding the economy. It’s about analyzing how individuals, groups and countries manage and use their resources.

Economics is a broad subject—so much so that it’s broken down into macroeconomics (looking at the economy as a whole) and microeconomics (focusing on individual decisions). Both aspects are important to inform future choices and forecast market trends, and by studying them you’ll develop skills to take into any ambitious career.

So what’s the deal with getting an education in economics? We’ve put together our top five reasons below, so you can make an informed decision about your future in economics.

1.    Economics is everywhere

Economics is a part of everyday life, and it’s also the gateway to the future. Studying economics gives you a better understanding of market dynamics and from there, you’ll be able to apply your knowledge to different organizations you go on to work with.

Top 5 reasons to study economics

What’s more, at IE University, it’s not all theory—you’ll be able to put your new knowledge to work and apply it to different contexts.

The field of economics is also growing at a rapid rate. Cryptocurrencies and fintech are redefining today’s landscape, and those with a solid economic understanding will be those who lead us into a future of limitless possibilities.

2.    Make an impact

Economics allows you to drive positive change. It’s a field of study that’s interwoven with technology, management, entrepreneurship and humanitarian progress, so our programs take a hands-on approach to introduce you to these different aspects and their potential for unlocking growth. Our economics programs also enable you to understand the links between these different but interrelated areas, so your future decisions are fully informed.

As the economy is constantly changing, with your knowledge, you’ll be ready to influence business decisions and adapt to fluctuating markets effectively.

Top 5 reasons to study economics

3.    Gain an international perspective

Economies work in tandem with each other. The links between them will give you an international understanding of how the world works and reveal insights about different cultures, people and societies.

Top 5 reasons to study economics

What’s more, studying at IE University will surround you with a unique and international community, so you’ll be expanding your economic horizons and your global mindset at the same time.

4.    develop transferable skills.

Studying economics develops a lot of soft skills for you to take into any career. In particular, economics puts you in a prime position to develop your analytical and complex problem-solving skills. Other important skills for our globalized world include communication and cultural awareness, which you’ll also hone with an economics program. Additionally, you’ll improve your business knowledge—an asset that is essential in every corner of the working universe.

Economics programs equip you for graduate success, whatever sector you go on to work in.

Top 5 reasons to study economics

5.    Boost your career prospects

Economics is the backbone of any sector and you’ll be able to apply your knowledge across a variety of roles. With economics, your potential career paths include (but aren’t limited to!): finance, banking, insurance, law, and governance. Of course, studying economics opens up more senior roles. With a master’s degree in economics, you’ll be in the running for high-level positions.

According to the World Economic Forum’s Future of Jobs Report , analytical thinking and complex problem-solving are top skills for 2025. Economics graduates are already in high demand, and that demand is only going to increase.

Discover economics at IE University!

Studying economics at IE University puts you at the forefront of industry developments and shapes you into an excellent problem-solver.

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Department of Economics

  • Why Study Economics?

Preparing you for an ever-changing world

The study of economics helps people understand the world around them. It enables people to understand people, businesses, markets and governments, and therefore better respond to the threats and opportunities that emerge when things change. Economics majors are well-positioned in an ever-changing world because they have problem solving and analytical skills that allow them to succeed in variety of career paths—law, risk management, actuary, finance, foreign affairs, public administration, politics, policy analysis, health administration, entrepreneurship, market analysis, journalism, and unknown careers of the future.

The breadth and flexibility of an economics degree prepares students to adjust to unexpected changes and take advantage of unexpected opportunities. A study by LinkedIn  (PDF, 43 KB) found that college graduates change jobs and careers about four times in the first ten years after graduation. With its wide-ranging applications, economics is a great choice in an ever-changing world.

Providing you with the knowledge and skills that employers want

Economics, at its core, is the study of how to evaluate alternatives and make better choices. It develops critical-thinking and problem-solving skills to make good decisions. It develops analytical skills to examine data to support good decisions. These skills are desired across careers in the public and private sectors. An annual study by the National Association of Colleges and Employers (NACE) consistently finds that employers want the skills gained from studying economics—the ability to make decisions, solve problems, obtain and process information, analyze data, and write and speak effectively.

Ensuring your successful future

No matter what the future holds, an economics major helps people succeed. Understanding how decisions are made, how markets work, how rules affect outcomes, and how economic forces drive social systems will equip people to make better decisions and solve more problems. This translates to success in work and in life.

Though economics majors enjoy relatively high starting salaries, the key indicator of the value of an economics major is long-term success and lifetime earnings. A recent study  (PDF, 194 KB) finds the lifetime earnings of economics majors outpaces other business major, social science majors, and even general engineering majors. Another study  (PDF, 1.2 MB) finds that lawyers with an undergraduate degree in economics earn $10,000 more annually than other lawyers. And an analysis of S&P 500 CEOs  (PDF, 289 KB) showed that economics majors are more likely to become a CEO than any other major.

Enabling you to contribute to the greater good

Economics provides the primary framework for public policy analysis. The major equips people to understand the fundamental policy issues that shape market and social outcomes. An economist understands the immediate issues like tradeoffs, benefits versus costs, market failure, public finance, but also understands the broader issues of generational impacts, welfare impacts, and inequality. Economics majors are equipped with the language and skills to engage in public policy debates and act to advance economic and social progress.

Preparing you for graduate school and law school

Economics imparts clear reasoning and logical thinking. This not only helps people do well personally and professionally, it helps prepare students for graduate programs and law school.

Law school? Studies show  (PDF, 60 KB) that economics majors consistently have one of the highest average LSAT scores among all majors. Economics majors also have law school acceptance rates considerably higher than most majors, including pre-law programs.

MBA? Economics majors possess the broad perspective and problem-solving skills that top MBA programs value, and studies show  (PDF, 143 KB) they have the highest average GMAT score among all business majors.

Graduate programs? Economics provides a strong foundation for graduate study in economics, public policy, political science, sociology, among others. Students interested in pursuing a graduate degree in economics should consider a minor in math.

Enhancing other majors

Economics can be a valuable complement to most other majors. The breadth and flexibility of an economics major can be an invaluable way for people to diversify when paired with a more career-specific business major like accounting, marketing, finance, or computer information systems, and even more so when paired with a non-business major like computer science, healthcare management, journalism, environmental science, building science, or design.

Home — Application Essay — Business School — Why Economics Major is My Primary Academic Interest

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Why Economics Major is My Primary Academic Interest

  • University: Columbia University

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Words: 303 |

Updated: Nov 30, 2023

Words: 303 | Pages: 1 | 2 min read

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Cases like these at the DECA International Career Development Conference pushed me beyond my comfort zone, and helped me uncover my love for business strategy. This is why economics major is my academic goal. I believe that studying Economics with Business Management at Columbia is the next step in developing my interests towards a career that serves society.

Since my freshman year, I’ve nurtured a hobby for refurbishing and selling smartphones. While my interest started off technical, I slowly realized I was more excited by profitability ratios, calculating costs, and making sales than I was by repairing hardware. In addition, I participated in the National Economics Challenge, applying principles of macro and microeconomics to solve real-life scenarios. My team placed first in the Wild Card competition and advanced to nationals, placing 12th in the U.S. I’ve taken the initiative to self-study Coursera courses in corporate finance, financial accounting, and marketing; I’m currently taking operations management.

Economics can help us better understand the world we live in, providing a lens through which we can visualize solutions to seemingly insurmountable issues. I aim to become an entrepreneur who uses economics to combat social problems. Development and welfare economics are two areas that interest me: I’m fascinated by how governments promote economic development through health, education, and workplace conditions and how welfare economics can quantify benefits to society using social welfare functions. Through Economics and Business Management at Columbia, I’ll be better equipped to analyze social issues and to alleviate social problems.

Keep in mind: This is only a sample.

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To conclude the essay, so why economics? Einstein mused that given an hour to save the world, he would spend 55 minutes studying the problem. As a future economist, I will use the discipline of economics to develop a better grasp of problems before attempting to create solutions.

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essay on why i like economics

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Essay on Why Is It Important To Study Economics

Students are often asked to write an essay on Why Is It Important To Study Economics in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on Why Is It Important To Study Economics

Making smart choices.

Economics teaches us about making choices when we don’t have everything we want. It’s like deciding whether to spend your allowance on a new game or save it for a bike. By understanding economics, you learn how to make better decisions with your money.

Understanding the World

Studying economics helps you understand why things cost what they do and why people behave the way they do with money. It’s like unlocking the secrets behind why your favorite chocolate bar’s price goes up.

Improving the Future

Learning about economics is not just about money. It’s also about finding ways to make the world a better place. By understanding economics, we can figure out how to use our resources wisely and help everyone have a good life.

250 Words Essay on Why Is It Important To Study Economics

Understanding money and resources.

Economics is a subject that helps us understand how money and resources are used in our world. It teaches us about how things like apples, toys, and even our time have value. By studying economics, we learn how to make smart choices with what we have. This is important because both money and resources are limited, and we need to know how to use them wisely.

Making Better Decisions

When we study economics, we learn how to make better decisions. It’s not just about saving money or spending it, but also about understanding the best ways to use our resources. This can help us at home, in school, and one day, in our jobs. Knowing about economics can even help us make our community and country a better place by understanding what things are really worth.

Economics also helps us understand the world around us. It shows us how businesses work and why prices for things like food and clothes can go up and down. By learning about economics, we can understand why these changes happen and how they affect us and our families.

In conclusion, studying economics is important because it helps us make smart choices, understand the value of things, and know more about how the world works. It’s a subject that can help us in our daily lives and in making the world a better place.

500 Words Essay on Why Is It Important To Study Economics

What is economics.

Economics is the study of how people make decisions in the face of scarcity. Scarcity means that there are not enough resources to satisfy all of our wants and needs. Economics helps us understand how people allocate these scarce resources among different uses. It also helps us understand how prices are determined, how markets work, and how government policies affect the economy.

Why Is It Important To Study Economics?

Economics is important because it helps us understand the world around us. It can help us understand why the prices of goods and services change, why some countries are rich while others are poor, and why some people are unemployed while others are not.

Economics can also help us make better decisions. By understanding how the economy works, we can make better choices about what to buy, how to save, and how to invest.

Economics In Everyday Life

Economics can also help us understand the news. When we read about the economy, we can use our economic knowledge to interpret the information and make informed decisions. For example, if we know that the unemployment rate is rising, we can understand that this will likely lead to a decrease in consumer spending.

Economics For The Future

Economics is also important for the future. As the world changes, we need to understand how the economy will adapt. Economics can help us prepare for these changes and make sure that we are able to thrive in the future.

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essay on why i like economics

Why I Majored in Economics

Lucie abele ’22.

I chose to major in economics, because I enjoy learning about human decision-making and how our decisions directly impact our communities and environment. I also appreciate the extreme versatility within the field. Economics is the perfect crossover of research and analysis with human activity. Economic theory reaches into the fields of both STEM and social science, involving studies of areas such as math, politics, and psychology. Additionally, economic theory allows for quantitative analysis and qualitative examination of human and economic interaction in complimentary fields like law, business, finance, consulting, health and athletics.

For example, in Professor Stephen Marks’ Law and Economics class, we learned to evaluate legal cases from the perspectives of both economic and legal theory. I found the deliberate intertwining of these two fields intriguing – while they seem to be at odds, economic theory factors into legal theory and decision-making far more prominently than I would have expected. In Professor Marks’ course, I was able to explore in depth the decisions of various Supreme Court cases. I conducted detailed research regarding the legal and economic analysis of  Penn Central Transportation Co. v. City of New York,  diving into the legal issues of the case, the economic factors, and the social and public policy implications of the majority decision. Exploring topics such as these on a case-by-case basis showed me how applicable the study of economics is to so many other fields and opened my eyes to the myriad of areas and opportunities into which an economics major could lead.

Additionally, the economics faculty at Pomona is incredible. Economics is a subject that impacts everyone, and understanding economics, even at an introductory level, is helpful in one’s day-to-day life. The gifted scholars in this department not only teach Economic theory and its implications, but they also foster a successful learning environment and assist students in and out of the classroom. With them and with my Economics peers, I have made great friendships and have deeply enjoyed learning in this inviting space.

Cathy Kim ’22

Economics at Pomona is a great crossroads for those who enjoy the certainty of numerical answers and also seek a deeper understanding of human behavior and decision-making processes. As someone who enjoys reaching that one perfect answer while also wondering how people come to financial decisions, I found that economics was a great interdisciplinary major for me. Coming into college, I never considered majoring in economics, however, Professor Manisha Goel’s introductory macroeconomics class completely changed my outlook. Learning about models and their real-world applications helped me understand how central these principles are in our lives, and I found myself connecting my new economics knowledge in other classes and passions.

A great benefit of majoring in economics is that it opens doors to a wealth of diverse career options. Many economics majors pursue careers in finance and consulting, however, the tools you learn are applicable in any industry. Thanks to the practical knowledge I gained from my courses, I will be spending my summer interning in the fashion industry, at Bloomingdale’s Executive Development Program. Ultimately, you’re free to combine the major with anything else you are passionate about.

In my Economics of the Public Sector class, most of our lectures focused on domestic dynamics, however, we were given the freedom to research any country we were interested in for our final paper.

Using the principles, we learned in class, we analyzed the impacts of economic reforms on Mexico’s  ejido system and came up with policy recommendations. Much of the work I’ve done in my classes helps me look at economic realities through a more knowledgeable lens.

Asaka Mori ’22

I instantly knew I wanted to major in economics when I took Principles of Macroeconomics course in the first semester of my freshman year. I was amazed by how we could predict human behavior and model various social phenomena using theories I’ve learned in class. Economics helps us understand so much of what is happening around the world, including politics, climate change, poverty and health care. I also love the fact that it is an interdisciplinary major which incorporates both quantitative and qualitative analysis and can be used in any career paths after graduating from college.

Our Economics Department provides collaborative learning experience with professors. In the economics classes I have taken, I was fortunate to meet so many brilliant professors who are more than willing to help us learn economics and prepare for our future. I enjoy going to office hours, where professors are willing to explain the class material until I can fully understand and are open to talk about my future plans.

During Summer Undergraduate Research Program (SURP), I had a chance to work as a research assistant for Professor Michael Kuehlwein who was my professor for Principles of Macroeconomics class. We researched the impact of rising minimum wages in Los Angeles (L.A.) on the employment rate of the garment industry in the city. I was fascinated by this topic because the empirical effect of the change in minimum wages is still debated despite the fact that the economic theory suggests that the rise of minimum wages would decrease the employment rate. For our research, after collecting a sample of apparel manufacturing firms in L.A. from 2008 to 2018, we measured the ratios of the employment rates in the garment industry in L.A. to that in the United States as well as the ratios of minimum wages in L.A. to the federal minimum wages over these years. By using ratios, we controlled for other factors that may influence the employment rate, such as the rise of the rent prices and global competition. We ran regressions to measure how the ratio of minimum wages in L.A. to the federal minimum wages, which has been increasing as the minimum wages in L.A. increases rapidly over the years, is correlated with the ratio of employment rate in L.A. to that in the U.S., or how much faster the employment rate is falling in L.A. compared to the national trend. Professor Kuehlwein helped me write my own research paper for the first time, and this experience gave me a glimpse of what it is like to conduct a research in economics.

Pomona College gives us opportunities to explore different subjects, and I believe that economics is the one that is worth being explored. This is not just because of how great our economic department is but also because this subject is intertwined with other fields of study. After taking economics classes, I became interested in other subjects which are also discussed in our economics courses, such as mathematics, politics, and environmental analysis. If you are a Pomona student, I would definitely recommend taking at least one econ class!

Virgil Munyemana ’22

Coming into college, I knew I was interested in entrepreneurship. My sister recommended I do economics given its association with business and finance, so I honestly took economics courses on a whim at first. However, as I delved deeper into the major, I've realized how interdisciplinary the field is and all the different fields it could be used in, from policy work to academic research. I’ve even seen it used in social justice contexts, which is especially important given the renewed push for racial justice we’ve seen in the past summer. Economics can take you anywhere you want to go, it just depends on how you want to use it.

The professors are all very in love with the courses they teach and their enthusiasm shows, especially in office hours. They always try to make themselves as available as possible, which has been really helpful for me coming from a less privileged background. In addition, the economics department offers a cohort specifically for underrepresented students in the economics field to have a support system. Without this cohort, I probably wouldn’t have enjoyed the major as much as I did in my first year.

During the summer after my sophomore year, I was fortunate enough to have an internship at a private equity firm called the Vistria Group. They buy companies that work in healthcare, education, and/or financial services and try to improve their business models. I was working in the healthcare team and was tasked with creating an investment thesis for the durable medical equipment market, which is made up of things like glucose monitors, ventilators, and other products for chronic conditions. I had to use data from sources such as the Center for Medicare/Medicaid Services and the U.S. Census Bureau to support my argument, allowing me to use some of my economics knowledge in a real world situation. It was a really valuable experience and I also felt like I was doing some good in the world at the same time.

The economics department put out a very comprehensive statement in support of Black Lives Matter and acknowledged the role that economics can have in perpetuating these issues, as well as solving them. I appreciate the department taking the time to do this and am hopeful they will incorporate this mindset into the way classes are taught. I’m happy to be in a major where I feel supported.

Calvin Ng ’22

Growing up in Singapore, I was constantly exposed to policies which strived to maximize our benefits given the constraints of our limited natural resources. I had always considered an economics major, but with the vast array of fascinating fields offered, it initially felt difficult to confine myself to a single field of study. However, the beauty of economics lies in its multidisciplinary nature which allows me the flexibility to focus on economics in conjunction with my other interests.

Economics is a constantly evolving field that draws from a multitude of disciplines. For instance, in Professor Eleanor Brown’s microeconomics class, we attempted to quantify philosophy’s age-old trolley problem and studied how economists determine the value of a human life. In the field of behavioral economics, we integrate ideas from psychology to understand why humans sometimes act “irrationally.” In the new field of neuroeconomics, we interpolate the tools of neuroscience such as fMRIs to elucidate the intricacies of the human mind.

The economics major, which requires five electives, allows great flexibility by allowing students to craft their own path and gain depth in a particular subfield of economics. However, my best advice is to also take classes outside of your immediate field of interest. I took Economics of Immigration [course] on a whim this past semester, and it ended up becoming one of my favorite classes; I was able to gain a deep appreciation for the role of immigrants in a country’s success.

In addition, many students, like myself, also complete an additional major or minor. As an economics and biology double major, I am interested in solving health problems through scientific advancement and allocation of healthcare resources. Within the economics major, I was often given complete freedom to tackle research projects of my interest. In my Econometrics class, I had the opportunity to study the determinants of receiving the Influenza vaccine. I analyzed census data from the Centers for Disease Control and found that education level and race were the largest determinants. I hope to extrapolate these findings and apply them to the upcoming COVID-19 vaccines.

Outside of the classroom, I have explored a wide variety of internships. I gained experience as a research assistant investigating the dancing plant ( C.Motorius ) before working as a business analyst for StemCord, a biotechnology cord blood bank. This summer, I will be working as a summer associate for a consulting firm in Los Angeles. Hence, I strongly believe that the economics major will ground you with a strong foundation of the quantitative and qualitative skills required for almost any job. Whether your next destination is business, government, graduate school, or something completely different, you will be well equipped to take on the next challenge.

Helena Ong ’22

Economics embodies what it means to be interdisciplinary in both its foundational principles and its applications. Taking the introductory economics courses revealed how the discipline served as a baseline for understanding so much about human behaviors, interactions and facets of society. The upper division course selection exposes you to just how complex and diverse the field of study is with classes such as Corporate Finance, Behavioral Economics, and Environmental Economics that have personally helped me to understand how Economics is applicable to so many different fields.

The Economics Department at Pomona houses some of the most supportive and inspirational faculty I have met. Throughout my 10 economics courses, I have been able to learn from professors who have encouraged me through classes, office hours, research projects and even lunches. Whenever I had questions about my academic journey at Pomona or my internships and job opportunities, my economics professors provided me with invaluable insight and experience that has positively shaped my time at Pomona. It is so evident that the professors at the Economics Department not only are incredibly knowledgeable and passionate about what they teach, they also have a genuinely vested interest in their students’ lives. Whether it was helping me choose between internship offers or releasing an important statement about economics’ role in social issues, the faculty in the department are a huge reason I studied economics at Pomona!

I have been able to apply the knowledge from classes at several of my summer projects and internships. Working at the USDA, I was able to utilize trade and tariff theory I learned in my macroeconomics courses to help quantitatively model the U.S.-China trade-war in 2019. I have also been able to extend the financial and business side of economics at my internship in asset management with Alliance Bernstein where I worked to manage risk in institutional clients’ portfolios and my internship in Trading with JP Morgan where I will research markets for certain asset classes.

Ananya Sen ’22

I first fell in love with economics in my senior year of high school, when I came across Crash Course Economics on YouTube while preparing for a test and learnt about the practical applications of the subject – from how firms set prices to finding a way to measure individual happiness. And so, coming into college, I decided to major in economics.

However, I was only truly convinced of my choice when I took my first two electives at Pomona. It was then that I realized that economics is less a subject than a lens through which I can analyze absolutely anything and everything. For instance, in a paper I wrote for my Econometrics class, I studied the relation between literacy and mortality in India. Despite being a subject that focuses on optimization through the use of constraints ( iykyk ), economics for me proved to be optimal for the  freedom  it provides in the fields that it can be applied to – from mathematics to political science to psychology. Moreover, by comprising both normative and positive science, economics teaches one to bridge the gap between idealism and realism, and thus gain the potential to change society for the better.

Studying economics at Pomona is especially great because the professors are not only brilliant and truly passionate about the subject, but also exceptionally caring and invested in your personal success. The classes themselves are designed to teach you how to be a  good  economist; for instance, Professor Gary Smith’s Statistics course focuses a lot on how to avoid data modification, while Professor Malte Dold’s PPE course attempts to integrate ethics into economic analysis. Moreover, Pomona’s culture of collaboration is exemplified in the department: some of my most memorable nights at Pomona were spent wading through difficult but rewarding problem sets in one of the classrooms in Carnegie Hall with my classmates, nibbling on one or two chocolate muffins from the Coop.

This semester, I am working part-time as a research assistant to Professor Abhinash Borah at Ashoka University in New Delhi, where I am studying how polarization and the motivated reasoning it engenders influences content and (dis)information transmission in media spaces. The research involves designing a behavioral experiment, and analyzing social media algorithms, amongst other things. I am particularly excited about this opportunity because the scope of the project is more than just academic – apart from writing papers, we will also be brainstorming and implementing strategies to initiate discourse on these topics.

To any prospective students of economics, I will say this: do not be afraid to email professors, even if you have never met them before, and ask for advice on classes, research opportunities or grad school. The department provides you with all the support you may need, but it is up to you to seize it.

Franco Vijandre ’22

Coming into Pomona College I wanted to study something that would leave me with a diverse skill set, challenging both my quantitative and qualitative abilities, and economics does just that. Economics is about understanding behavior and real-world outcomes, and to do that you need to be creative in your reasoning but at the same time grounded in quantitative fact. Economics is also incredibly interdisciplinary and combines many of my other interests in mathematics, politics and sociology into one major. The interdisciplinary nature of the subject leads to a diverse offering of classes from finance courses to courses in development or international relations. The diversity of the major allowed me to find my own niche and granted me the flexibility to apply my economics degree to many potential career paths.

The professors in the Economics Department are truly remarkable. They all have a deep passion for what they teach and genuinely care about your learning. While the courses are challenging, the department provides all the tools for its students to succeed, with regular office hours, mentor sessions, and cohorts. The courses in the major are designed to equip students with a skill set to apply to real-world scenarios and original research. By my second year, I had already written two research papers surrounding my interest in voter trends, by utilizing the skills taught in my Economic Statistics and Econometrics classes. Most importantly the Economics department is filled with a great sense of camaraderie. Everyone is rooting for your success and the department will make any student feel at home.

This past summer I assisted Professor Michelle Zemel and Professor Manisha Goel in their research on economic uncertainty caused by the COVID-19 pandemic. My contribution to the research was to prepare a literature review to understand how an abstract concept like uncertainty is measured and what macro and microeconomic effects are expected during times of heightened uncertainty. I empirically tested the different methods of calculating uncertainty, aggregating millions of rows of stock price and forecaster data, to conclude that the uncertainty caused by the COVID-19 pandemic is at historic highs, even more so than the 2007-2009 recession. In addition to my summer research, I also interned at a boutique investment bank. I was working on several live deals in the medical devices and social media industries. During my internship, I was able to see how my studies in economics applied outside the academic setting. I constantly used econometric tools, and both macro and microeconomic theory to aid in my analysis and construction of financial models.

I would recommend to any incoming student, even if you are not interested in the field, to take at least one introductory course in economics. The economy affects everyone’s life and having a basic understanding of macro and microeconomic concepts will be incredibly useful in the future.

Kevin Wu ’23

There’s an old story that goes something like this: A physicist, a chemist, and an economist are stranded on a desert island, and they’re famished. Then a can of soup washes ashore. Chicken noodle soup let’s say.

But, famished as they are, our three professionals have no way to open the can. So, they put their brains to the problem. The physicist says, “We could drop it from the top of that tree over there until it breaks open.” The chemist says, “We could build a fire and sit the can in the flames until it bursts open.” The two squabble a bit, until the economist says “No, no, no. Come on, guys, you’d lose most of the soup. Let's do this. First, assume we have a can opener...”

Basically, I like to tell people I chose to major in economics so that I could assume and model my way out of any problem. Joking aside, economics is the intersection of math, psychology and decision making that can describe a wide array of experiences and phenomena that we hardly notice in our daily comings and goings—phenomena that are nonetheless incredibly revealing and insightful. It was both the wide breath and media coverage of the subject that initially drew me in, in addition to the fact that my high school economics teachers were really cool. Thanks Mr. Geers, et al.

Economics not only offers the opportunity to play with math, numbers and models, but it also enables us to better understand and recognize embedded assumptions in stories and models that drive how people think and interact. It marries stories and reality to models and numbers that we can digest and understand to get a better picture of what the heck is going on in the world around us.

As with any Pomona major, my most memorable experiences have been speaking with alumni, students and professors or working with them to get a better grasp of a specific problem, subject, or career path. There is a lot of content to cover in economics and some topics may be both mathematically and intuitively challenging, but when you sit down on zoom, and have an entire whiteboard filled with abstracts of Ash Ketchum, bizarre scribbles, and half-completed graphs—among many other things—and you’ve spent time with others really digesting a tough problem or discussing current events and plans for the future...that’s when you say to yourself: this is awesome.

For future students, all I have to say is try it out! Economics is so broad that you could find a niche in any of its verticals. What you learn along the way are the problem-solving mechanisms that will carry over to any occupation or club or obstacle you experience in the future, and faculty are really willing to sit down and help.

My Econstats companion and I last semester wrote a topic on the relationship between COVID-19 cases and the impact on the restaurant industry for different geographical relationships in the U.S. We were given the tools and the freedom to explore a variety of topics we were interested in and turned it into something we could pin to the refrigerator at the end of the year--which was really cool. It was like: Hey mom! I’m not just sitting around eating shrimp crackers during college. I’m doing something with my life.

One thing I’m really excited about—but kind of slow to complete—is an economic analysis of South Park (a TV show I’m into), SouthParkonomics if you will. It’s fun just taking some of the content learned in class and trying to apply in some quirky places to see how things hold up/what they look like. Taking theory to application, so they say. There’s a lot of that type of stuff at Pomona (not only in the econ department) where people are taking what they like to do and put it into something tangible. I didn’t really get it when I first got to campus, but it’s kind of contagious, so now I kind of do.      

If you ever have any questions, always feel free to reach out, you will find that more than often people will have a lot to give, even to complete strangers. Reach out to others in your classes and form a team to bounce ideas off and work with, building that team will be critical to your success. As with anything though, it takes time, so even if things aren’t going well—if you can even take one inch forward or find somebody to talk to—you’ve really gone a mile in accomplishing things. Fight On!

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ECONLIB Guides

What Is Economics?

What Is Economics?

Introduction

Economics is about making choices. We make all kinds of choices every day. How much should I spend on gas? What’s the best route to work? Where should we go for dinner? Which job or career should I go for? What are the pros and cons of finishing college versus taking a job or inventing the next, best Internet startup? Which roommate should take care of washing the dishes? Can I get that dog as a pet? Should I get married, have children, and if so, when? Which politician should I vote for when they all claim they can improve the economy or make my life better? What is “the economy,” anyway? What if my personal or religious principles conflict with what people tell me is in my best economic interest?

Many people hear the word “economics” and think it is all about money. Economics is not just about money. It is about weighing different choices or alternatives. Some of those important choices involve money, but most do not. Most of your daily, monthly, or life choices have nothing to do with money, yet they are still the subject of economics. For example, your decisions about whether it should be you or your roommate who should be the one to clean up or do the dishes, whether you should spend an hour a week volunteering for a worthy charity or send them a little money via your cell phone, or whether you should take a job so you can help support your siblings or parents or save for your future are all economic decisions. In many cases, money is merely a helpful tool or just a veil, standing in for a partial way to evaluate some of the goals you really care about and how you make choices about those goals.

You might also think economics is all about “economizing” or being efficient–not making foolish or wasteful choices about how you spend or budget your time and money. That is certainly part of what economics is about. However, that’s just the tip of the iceberg. We all know that we can save money or time by being more efficient in our planning. A trip to the supermarket can be coordinated with a trip to take your child to school or to deposit a check at the bank across the street to save on gas. But we sometimes don’t choose the most efficient options. Why not? Economics is also about plumbing the depths of why we sometimes do and sometimes don’t make what seem like the most economizing or economical choices.

Is economics a science (like physics), or is it a social science, or even an art? What is the difference, and what do we know about what we can’t or don’t know for now? Can economic problems be solved by better government, more experts, bigger computers, more engineering, better education, less government, more dispersed knowledge, more markets? How can we make informed choices?

You’ve probably heard that economists disagree about a lot of things. Actually, what economists disagree about is politics or public policy, not economics. Exploring the interface between politics and economics is part of the fun.

On this page are some famous, standard definitions about what economics is all about.

Definitions and Basics

Economics is the study of given ends and scarce means. Lionel Robbins , biography, from the Concise Encyclopedia of Economics :

Robbins’ most famous book was An Essay on the Nature and Significance of Economic Science , one of the best-written prose pieces in economics. That book contains three main thoughts. First is Robbins’ famous all-encompassing definition of economics that is still used to define the subject today: “Economics is the science which studies human behavior as a relationship between given ends and scarce means which have alternative uses.”…

What is “political economy”? Chapter I, Principles of Economics , by Alfred Marshall.

Political Economy or Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing. Thus it is on the one side a study of wealth; and on the other, and more important side, a part of the study of man. For man’s character has been moulded by his every-day work, and the material resources which he thereby procures, more than by any other influence unless it be that of his religious ideals; and the two great forming agencies of the world’s history have been the religious and the economic. Here and there the ardour of the military or the artistic spirit has been for a while predominant: but religious and economic influences have nowhere been displaced from the front rank even for a time; and they have nearly always been more important than all others put together. Religious motives are more intense than economic, but their direct action seldom extends over so large a part of life. For the business by which a person earns his livelihood generally fills his thoughts during by far the greater part of those hours in which his mind is at its best; during them his character is being formed by the way in which he uses his faculties in his work, by the thoughts and the feelings which it suggests, and by his relations to his associates in work, his employers or his employees.

Isn’t economics nicknamed the “dismal science” because it is all about running out of resources and the inevitable decline of life as we know it? Who coined the phrase “the dismal science”? The Secret History of the Dismal Science: Economics, Religion, and Race in the 19th Century , by David M. Levy and Sandra J. Peart. Econlib, January 22, 2001.

Everyone knows that economics is the dismal science. And almost everyone knows that it was given this description by Thomas Carlyle, who was inspired to coin the phrase by T. R. Malthus’s gloomy prediction that population would always grow faster than food, dooming mankind to unending poverty and hardship. While this story is well-known, it is also wrong, so wrong that it is hard to imagine a story that is farther from the truth. At the most trivial level, Carlyle’s target was not Malthus, but economists such as John Stuart Mill, who argued that it was institutions, not race, that explained why some nations were rich and others poor….

Economics on One Foot , a LearnLiberty video.

Prof. Art Carden, in memory of Ayn Rand’s philosophy on one foot, presents economics on one foot.

In the News and Examples

Diane Coyle on the Soulful Science , EconTalk podcast.

Diane Coyle talks with host Russ Roberts about the ideas in her new book, The Soulful Science: What Economists Really Do and Why it Matters. The discussions starts with the issue of growth–measurement issues and what economists have learned and have yet to learn about why some nations grow faster than others and some don’t grow at all. Subsequent topics include happiness research, the politics and economics of inequality, the role of math in economics, and policy areas where economics has made the greatest contribution….

Isn’t economics all about supply and demand? Richard McKenzie on Prices , EconTalk podcast. June 23, 2008.

Richard McKenzie of the University California, Irvine and the author of Why Popcorn Costs So Much at the Movies and Other Pricing Puzzles, talks with EconTalk host Russ Roberts about a wide range of pricing puzzles. They discuss why Southern California experiences frequent water crises, why price falls after Christmas, why popcorn seems so expensive at the movies, and the economics of price discrimination….

Isn’t economics all about Adam Smith and the invisible hand? Adam Smith: The Invisible Hand , a LearnLiberty video.

Prof. James Otteson, using the ideas of Adam Smith, explains how the division of labor is a necessary and crucial element of wealthy nations.

Don’t all economists disagree? Henderson on Disagreeable Economists . EconTalk podcast, July 30, 2007.

David Henderson, editor of the Concise Encyclopedia of Economics and a research fellow at Stanford’s Hoover Institution, talks with EconTalk host Russ Roberts about when and why economists disagree. Harry Truman longed for a one-armed economist, one willing to go out on a limb and take an unequivocal position without adding “on the other hand…”. Truman’s view is often reflected in the public’s view that economic knowledge is inherently ambiguous and that economists never agree on anything. Henderson claims that this view is wrong–that there is substantial agreement among economists on many scientific questions–while Roberts wonders whether this consensus is getting a bit frayed around the edges. The conversation highlights the challenges the everyday person faces in trying to know when and what to believe when economists take policy positions based on research. Is it biased or science?

Humorous essay. Zero-sum games like income redistribution are more exciting than economic fundamentals like the gains from trade. Why is Economics So Boring? , by Donald Cox. Econlib, November 7, 2005.

Stan: Ollie, you know the worst part about being an economist? You meet someone at a cocktail party, you tell them you teach economics. Ollie: …and they say “Oh, yeah, I took that in college. I hated it. It was sooo boring!”… … getting the credit for Equation 14 is a zero sum game. And we care about zero sum games. There’s drama. There’s tension. There’s a loser for every winner. It makes for good TV, doesn’t it? But it’s not very common in reality. What common in reality is both sides are better off. The buyer and the seller of the car in the ad. That’s reality. No violence, no theft. Boring balloons. Boring happy people. Economics is boring….

Is economics just a fuss about language? The Economy: Metaphors We (Shouldn’t) Live By , by Max Borders.

“Argument is war.” That’s what cognitive linguists George Lakoff and Mark Johnson write in the opening chapter of their influential 1980 Metaphors We Live By. In that seminal book, Lakoff and Johnson offer a number of powerful lessons about figurative language: Metaphor is more than mere literary window dressing; metaphor is a fundamental aspect of human thought and language; and metaphors help us navigate the real world with a degree of efficiency that literal language can’t offer. It can even–for better or worse–change our perceptions of things….

A Little History: Primary Sources and References

Economics is sometimes called catallarchy or catallactics, meaning the science of exchanges. Where did this term first come from? Lecture I, Introductory Lectures on Political Economy , by Richard Whately.

It is with a view to put you on your guard against prejudices thus created, (and you will meet probably with many instances of persons influenced by them,) that I have stated my objections to the name of Political-Economy. It is now, I conceive, too late to think of changing it. A. Smith, indeed, has designated his work a treatise on the “Wealth of Nations;” but this supplies a name only for the subject-matter, not for the science itself. The name I should have preferred as the most descriptive, and on the whole least objectionable, is that of CATALLACTICS, or the “Science of Exchanges.”…

Advanced Resources

Is Economics All About Scarcity? , by Arnold Kling. Blog discussion on EconLog, January 17, 2007.

… I am two-handed on this issue. On the one hand, just because food, say, has become more abundant does not mean that we can ignore scarcity. At any moment in time, for a given state of know-how, the conventional definition of economics as dealing with the allocation of scarce resources among competing ends applies. On the other hand, some of the most interesting economic observations concern relative abundance. Look at our standard of living compared to 100 years ago. Look at South Korea compared with North Korea. Robert Lucas famously said that “The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them it is hard to think of anything else.”…

Related Topics

Is Economics a Science? Wellbeing and Welfare Scarcity Incentives Efficiency Cost-Benefit Analysis Division of Labor and Specialization Money Management and Budgeting Productive Resources Property Rights

Fortifying Economic Resilience: Analyzing Reserves in the French Treasury for Francophone Africa 1 | P a g e

22 Pages Posted:

Professor Kelly Kingsly

Regional Advisory Commision on Financial Markets

Date Written: July 03, 2024

This study seeks to address the existing gaps within current research by proposing innovative methodologies to assess the cost and effectiveness of disaster reserves. By harnessing advanced statistical modelling techniques and employing rigorous cost-benefit analysis, this paper aspires to substantially contribute to developing a holistic and evidence-based approach to resource allocation. It aims to guide policymakers and stakeholders towards informed decisions and sustainable disaster management strategies. In conclusion, expanding the research agenda beyond the confines of international currencies and sovereign reserves to incorporate disaster reserves is paramount. Such expansion is crucial to bolster nations' resilience and preparedness, guaranteeing the well-being and safety of those impacted by unforeseen catastrophes. (Ito & McCauley, 2020) (Sosa-Padilla & Sturzenegger, 2023)(Arslanalp et al.2022)(Benigno et al., 2022)(Céspedes & Chang2024)(Ozili, 2023)(Kumhof & Noone, 2021)(Carapella & Flemming, 2020) (Iancu et al.2022) (Aizenman et al.2020)

Rare events, like natural disasters or the failure of a systemically essential and heavily interconnected financial institution, can lead to substantial economic costs. Reducing vulnerabilities to such "fat-tailed" events entails building reserves, improving flexibility, and conserving policy space. This holds true in the financial world of short-term and forward-looking individuals, companies, and governments. There is much anecdotal evidence to support this proposition. After all, why is it expected to advise these actors to retain more savings or keep some fiscal reserves to draw upon in case of shocks?

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Professor Kelly Mua Kingsly (Contact Author)

Regional advisory commision on financial markets ( email ).

COSUMAF libreville Libreville, 237 Gabon 222225470 (Fax)

HOME PAGE: http://www.kellykingsly.org

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Guest Essay

Your Driving App Is Leading You Astray

A colorful illustration of a coiled snake, the turns of its body resembling a road map, with strands of chain link, smoke, a web and a large spider interspersed. A large pin points to the center of the illustration.

By Julia Angwin

Ms. Angwin is a contributing Opinion writer and an investigative journalist.

On my way to Kennedy International Airport, I grip the wheel tightly, swerving across three lanes of expressway traffic at 50 miles per hour to reach the exit. Minutes later, still shaken from my move, I hear a cheerful, disembodied voice instructing me to re-enter the expressway I had just exited.

I curse at my phone.

If you use a navigation app, you probably have felt helpless anger when your stupid phone endangers your life, and the lives of all the drivers around you, to potentially shave a minute or two from your drive time. Or maybe it’s stuck you on an ugly freeway when a glorious, ocean-hugging alternative lies a few miles away. Or maybe it’s trapped you on a route with no four-way stops, ignoring a less stressful solution that doesn’t leave you worried about a car barreling out of nowhere.

For all the discussion of the many extraordinary ways algorithms have changed our society and our lives, one of the most impactful, and most infuriating, often escapes notice. Dominated by a couple of enormously powerful tech monopolists that have better things to worry about, our leading online mapping systems from Google and Apple are not nearly as good as they could be.

You may have heard the extreme stories, such as when navigation apps like Waze and Google Maps apparently steered drivers into lakes and onto impassable dirt roads, or when jurisdictions beg Waze to stop dumping traffic onto their residential streets. But the reality is these apps affect us, our roads and our communities every minute of the day. Primarily programmed to find the fastest route, they endanger and infuriate us on a remarkably regular basis.

Worse, the promised time savings are often a mirage. There are so many elements included in calculating a route that the estimated time is always a guess. Yet who among us has not seen her estimated arrival time change several times while en route?

These products should be calibrated with greater acknowledgment of the uncertainties involved in predicting unexpected slowdowns and road closures. I am firmly of the belief — which I cannot prove, as our tech overlords refuse to share data with us — that the algorithms are often optimizing for time savings that are wider than their margin of error.

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essay on why i like economics

Economic data is looking good. So why the glum vibes?

essay on why i like economics

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Economists do not like talking about feelings. They didn’t sign up for feelings. Economists like talking about data, and the data looks strong: Unemployment is near record lows, GDP is growing, inflation is edging down, and wages are up. So why are our consumer confidence and consumer sentiment numbers so low? 

Martha Gimbel heads the Yale Budget Lab. She said being an economist right now is a little like being a doctor talking to a totally healthy patient, who keeps insisting they’re sick. 

“You’re saying like, ‘Your EKG is fine. Your blood work looks fine,'” said Gimbel. “The problem is that the patient keeps saying, ‘No, I’m not fine! I’m really not fine. I don’t feel good.'”

Take the job market: Right now, according to surveys from the University of Michigan, people are really worried about losing their jobs — a lot more than they were before the pandemic . But according to the data, layoffs are at the lowest level they’ve been since the government started tracking those numbers in 2000. 

“You are incredibly unlikely to be laid off right now,” Gimbel insisted. So why don’t people feel that way?

Julia Pollak is a labor economist with ZipRecruiter. She had a few ideas of what might be going on with this data-vibe disconnect. All of the reasons had to do with our feelings, and, in true economist fashion, Pollak offered some very official-sounding technical terms for each of these concepts:

#1. Salience bias

You might be thinking, “The job market is strong? It doesn’t feel strong! I’ve been reading about a bunch of layoffs for months!”

Pollak said the key here is salience bias. There have been layoffs in the last six months, and those layoffs have happened in companies and industries the media covers a lot, like media and tech.  

“The layoffs have grabbed headlines,” said Pollak. “That’s had an outsized effect on how we see the economy.”

In other words, those layoffs feel a lot more salient to us than the hiring boom that’s been happening in health care, even though health care is a much bigger part of our economy. 

#2. Loss aversion

We feel losses deeply and they stay with us. 

“This is called loss aversion,” explained Pollak. “It’s the tendency for the pain of losing to be psychologically about twice as powerful as the pleasure of gaining.”

If you lost a job in 2020, even if you eventually got a better job, the pain of the lost job looms larger. The bad times haunt us.

#3. Reference dependence   

Even if you’re better off today, overall, than you were before the pandemic, you will tend to measure your life against one glorious reference point: That month back in 2021 when you got two job offers in a week, your credit card balance was zero, and that dancing panda NFT you bought was worth $50,000 dollars. 

“ And that reference point is making it very difficult for people to feel happy now,” explained Pollak. 

In a lot of ways, it seems like we are determined to feel terrible about the economy. So in the midst of so much positive data, should economists even pay attention to our feelings? 

“Oh, economists do worry when consumer confidence falls,” said Pollak. “They worry that it will have real effects.”

Real effects like people stop buying stuff. 

“And then, as a result, businesses will suffer and lay off workers and that will set off a negative cycle,” Pollak said.

Consumer spending is about two-thirds of our economy: If people stop buying stuff, our vibecession will become a real recession, real fast. 

Still, in a lot of ways, we come by our economic pessimism honestly, said economist Martha Gimbel. That’s because economic data is very different than lived experience.

“As an economist, when I think about inflation, I think: ‘Look, inflation’s coming down from its peak, there are all of these positive signs,'” said Gimbel. “A normal person goes to the grocery store and says, ‘Hey, I’m paying X for milk and I was paying much less than X two years ago.’ And it makes them feel really bad about the economy.  And both the economists and the normal people are correct.”

But even by the lived experience measure, we should probably be happier: Our wages have risen faster than prices. Our pay has, on average, kept pace with groceries . So, why does our cost-of-milk-misery outweigh the pleasure of a plumper paycheck?  

“Economists always emphasize people’s utility functions,” explained Gimbel. “How people value different inputs are their utility functions.”

#4. Utility functions

In other words, people are going to feel their feelings. Certain things are going to resonate more than others and it’s not always going to have a lot to do with logic. 

For instance, our vibecession might not be entirely logical. Gimbel speculated a lot of these feelings might be about, not what’s happening now, but because of the traumas we went through during the pandemic.

“If you were talking about one of your friends who had had a really traumatic experience, you wouldn’t be saying to people, ‘Man, Mary just can’t get over what happened three years ago. Like, why is she so upset?'”

Of course not! You’d understand that Mary was probably all up in her utility functions because her salience bias probably had her in a loss aversion spiral. And if you would just give Mary some time, her reference dependence would eventually shift and she would feel better. 

Hopefully, given some time, we will all start feeling better, so we can get back to good vibes and economists can get back to talking about data. 

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Why you like what you like

Your preferences aren’t as original as you may think, says behavioral scientist 

Part of the Wondering series

The Business School’s Michael I. Norton has explored the influence of social norms on individual choices in his research and in the books “Happy Money” and “The Ritual Effect.” We asked him about the process behind personal preferences.

Our preferences vary from category to category. Music preferences are developed in the teen years. Typically, people think whatever music they were listening to from age 16 to 20 is the best music automatically, because that’s when they were forming their identity. But your favorite car brand doesn’t develop until you’re out there shopping for cars. So when the thing hits you that you need in your life, you start to develop preferences at that time. At the same time, your parents’ preferences massively influence your own, like the brand of spaghetti sauce you use is highly correlated with the one your parents used.

We like to think that our  attitudes  lead to our product choices, which is true sometimes, but it’s also the case sometimes that the product choices lead to the attitudes after the fact. And we’re not really aware of when that’s happening to us. For example, everyone in Manhattan has their opinion about the best pizza place. And it turns out that it’s almost always within walking distance of where they live. So is it the best pizza place? Or did they randomly end up in that spot?

We like to think that our  attitudes  lead to our product choices, which is true sometimes, but it’s also the case sometimes that the product choices lead to the attitudes after the fact.

It’s totally clear that it’s pretty random, but that’s not how we think about what we like, because we think we like what we like, and we come up with reasons after the fact. 

Wine connoisseurs, for example, will try to drink every wine to develop their palate. So you could say, well, if you develop expertise, then you’re more likely to have it be your true preference. But it’s still out of a set. And things like the price of a wine dramatically influence your views. So even with drinking all the wines, you’re still getting all these signals about how good it is. 

Online, it’s easier than it used to be for companies to figure out our personalities and target consumers based on that. We tend to think of our social media as reflecting who we are, which means it’s very different if a brand pops up on your Facebook or Instagram page, because you are more likely to think, “Oh, I like this part of who I am.” Whereas if I just throw something randomly at you on the radio, well, “Hold on a second, maybe that’s not something I like, it’s just because I happen to be listening right now.”

One of the things that AI can do is pull out associations that you wouldn’t otherwise pull out. Marketers already knew that if you were buying hot dog buns, you were probably also interested in hot dogs. But there are things that are correlated with each other for a reason we can’t necessarily put our finger on, but that can be pulled out of the data. And that means that we’re getting more and more personalized ads and brands thrown at us. 

To like something organically, without influence from companies or your social network, is really hard to do. You’re going to see what your friends wear — they don’t have to say, “Buy this brand,” but you’re going to see it and you’re exposed to it. The fact that fashion differs from country to country is because you look locally and you pick something out of the set that’s there.

We are able to segment down to very specific preferences and it’s much easier to have subcultures than it used to be, but that’s still a community and we reinforce each other. Even with something like “normcore,” dressing normal and boring is an aesthetic. You’re still choosing pants from a retailer and in the end, you are reflecting your preferences and something about yourself.

At the same time, so many categories are different group to group. We share this one with our parents, and we share this one with this other set of people, and then everybody’s still drinking bottled water from the same three brands. So it’s not types of people who all buy the same things. It’s really across product categories  and  across people. We have all these different identities that we’re expressing in all sorts of different ways. 

As for how our tastes might change, economists would think of it in terms of switching costs. So is it easy or hard to change the preference. For example, going from a PC to a Mac, you can do it obviously, they’re both computers, but there’s some switching costs, because it’s a different interface and you have to relearn something. Whereas with shirts, I know how to put all the shirts on. So switching costs to another brand are very, very low. I might as well jump over to another brand, or pizza, or whatever it might be. But things where it’s hard to move from one to the other are where people are more likely to stay where they are.

As told to Anna Lamb, Harvard Staff Writer

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