A Brief Guide On Why Economics Is Important. Economics is a major part of our day-to-day lives. Whether we understand it or not, economics affects most of our daily life decisions. From what to buy and when to buy, to deciding our representatives on a national level; all these tasks involve economics. Having a good knowledge of economics equips one with better decision-making abilities. It helps in developing reasoning and analytical thinking abilities. It helps an individual in understanding the world around them in a better way.
From making the small choices on a daily basis to the larger ones, economics helps you in deciding better. The study of economics is basically the interpretation of data. This interpretation of data helps one in understanding the past, present, and future scenarios. It equips a person with problem-solving skills and critical decision-making skills. But before discussing further what is the importance of economics, let us first understand what is economics.
What is economics?
An overview- In layman terms, you can put economics as an art of making decisions when faced with scarcity. It is the way of making decisions with all the parameters kept in mind. We have used the word scarcity because one cannot simply buy all the things one wants at any given point in time. One has to make a choice. Everyone has limited pay to afford his expenses. So in order to use the funds in an optimum way, one has to decide and take decisions. Like whether to buy a car or afford a vacation; whether to invest in a property or in a mutual fund; whether to plan a party or a small get-together. A more simple example would be whether to buy groceries from which store, one that offers a discount or from the one that offers cashback. You will be able to make all these decisions in a more informed way if you have an understanding of economics. Hence a basic knowledge of economics is a must.
Not only economics helps in wiser decision-making at a personal level but it also helps in taking decisions at a broader level. It helps you in understanding the bigger picture i.e. how a government works. How do the decisions are taken by the government affect you personally? It will help you in understanding the economy of your country.
Definition of economics-
Hence economics is the study concerned with the production, distribution, and consumption of goods and services. It helps in understanding and maintaining the demand and supply. Economics helps in allocating the resources fruitfully.
Economics can be divided into two main aspects-
- Microeconomics- microeconomics focuses on the individual behavior of customers and producers.
- Macroeconomics- macroeconomics focuses on the economy as a whole on a national, international level. It covers the big picture.
Let us now understand why economics is important. Economics helps in so many ways but in general, it can be guided as following-
- Enhances your reasoning and problem-solving skills
- Helps you in becoming a better citizen
- Enhances your knowledge
- Informed decision making
- Keeps you up-to-date
- Career prospects
Let us discuss all these in detail
- Enhances your reasoning and problem-solving skills- economics is all about the interpretation of data. You have to study the data present in front of you and all the facts and figures in order to carry out the results. It enhances your reasoning and logical thinking. You have to carry out the results after your interpretation of data which enhances critical thinking and develops a problem-solving attitude in a person. If you are good with these skills then it gets easier for you to carry out decisions in your personal life as well. For example, from which bank to apply for a loan, which mutual fund is better, which bank is giving maximum interest on fixed deposits to name a few.
- Helps you become a better citizen- an informed citizen is always the best citizen. Economics informs you. It helps you in understanding the policies of the government and how those will affect you on a personal level. Different politicians make different promises but you can decide which is better. Having an understanding of economics will help you in deciding which candidate is better for your nation. You can decide with the help of different parameters of the work that they have done in past years. Hence you will be able to choose a better candidate as an informed citizen. A good citizen is always in the interest of the nation. A nation always benefits from an economically literate population. It gives the people the power to interpret their economic world and evaluate critical issues.
- Enhances your knowledge- economics widens your knowledge. Mostly every subject requires a bit of economics if not much either directly or indirectly. Decision-making is a very important aspect of every subject. You will be able to make informed decisions if you are good at economics. Economic knowledge liberates the person’s abilities to take the personal and social decisions that one is going to encounter in their life. For example- applying for a loan, investing, buying and choosing a candidate, etc.
- Informed decision making- yes economics helps in informed decision making. Economics is our everyday life. We have to make decisions at our personal as well as at our social front like whether to go by metro or take a cab, how much to spend, which leads to choosing etc. A person with a good economic background will be able to make a more informed decision.
- Keeps you up to date- yes economics keeps you up to date. Economics is basically a study of how societies and nations manage and allocate their resources. It helps you in deriving the results. Whenever a policy is made by the government, you will get to know about it and will be able to interpret how it is going to affect you at a personal level. It will keep you up to date as you know what the policy is and will help you in deriving the strategies to keep its minimum effect on you.
- Career prospects- a degree in economics will definitely increase your career prospects. Economics is the essence of the business and is at the core of every nation. It opens a wide range of career opportunities in front of you from banking to finance, insurance, data analytics, public sector, and government jobs. A degree in economics is highly beneficial. Also due to increasing competitiveness in the market, businesses are hiring more economists and their demand would only increase further.
Economics is the study of resources. How people or a nation is allocating and managing its resources. It offers you the practices that help you to understand and optimize and interpret the data. This interpretation of data helps you in sound decision-making on a personal as well as social level. Every person is a part of a society that one lives in and affects its surroundings. An economically literate person is an asset to the nation. Economics is a way of life that tells you how to manage the resources for their best possible use.
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