What is Economics?


This is quite a difficult question and I find it gets asked a lot.

Economics is the science of choices.

The aim of an economist is to determine how to make efficient choices with scarce resources. An example of a scarce resource could be oil. Although we keep discovering more, as we develop better technology, there is no doubt that it is a scarce resource and will one day run out. It is our job as economists to make sure there is no wastefulness in the process of using this ‘precious’ scarce resource.

There are two types of Economists.

The Microeconomist (Microeconomics) is focused on an individual or firm. In this case we are determining the actions of a singular object and how to best maximise their utility (‘satisfaction’) or their efficiency (determining the right level of supply and demand for a firm).

The Macroeconomist (Macroeconomics) is focused on the economy as a whole. Traditional Macroeconomists focus on Inflation, Interest Rates, Economic Growth and Unemployment.

Economics is all about money.

Well, actually that’s a lie. When I tell people I study Economics they often remark with ‘that’s all about money isn’t it?’. The answer to that is ‘not really’. While Money, being a currency of transactions between individuals and global markets, has a large part to play in determining people’s actions (Microeconomics), as well as levels of Inflation and Interest Rates (Macroeconomics), it is actually only a small niche compared to what Economics is all about. Economists are focused on the choices we make, whether on a global or local scale.



Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s