I study/teach economics for a living, this made my try to think about why it is useful (besides that it gives me a job).
How To Run A Government
Economics has a lot to say about which government policies will make people better off or worse off. This is a big reason I got interested in economics, but its not very practical for the vast majority of people, who have essentially no influence over government policy (and in fact it is economists who are famous for arguing, perhaps incorrectly, that votes don’t matter).
Understand How The World Works
It’s always nice to just understand more, but in particular I think some insights are likely to make you happier. For instance, you may worry about not being a good person because you are selfish, but economics argues that in market settings being selfish often helps others too. Several insights of economics make you appreciate other people more: knowing that their specialization and labor is what makes the world, and you, so rich- people of different countries, religions, et cetera cooperate to make everything from your computer to your pencil. Whenever I get annoyed at the crowd in a coffeeshop or on the subway, economics reminds me that if it weren’t for the other customers, there would be no coffeeshop or subway. Learning about subjective value helps you not to look down on others so much for “bad taste” in music, books, et c.
Practical Skills
Econometrics (basically our word for data analysis) is the main practical skill of economics. It is a great tool for figuring out how the world works. I use it for academic research, but many private sector realize the value of econometrics (though they may call it analytics or data science or forecasting or something else). Another skill that only a few economists really master is mechanism design, which has been used to sell ads and spectrum and allocate kidneys, students, and medical residents.
Save Money
A lot of people get the idea that economics is about “how to make money”, but anyone seeing my paychecks would realize I’m not the one to teach that. We do have some things to say about how not to throw money away though. By learning about the Efficient Markets Hypothesis and investing in broad index funds, you will avoid losing money to fund managers fees and brokerage trading costs, and avoid the possible catastrophic failure of an undiversified portfolio. Sometimes you can use efficient markets to save time as well. If I want to know whether the recent jobs numbers were better than expected, I could read a lot about it, or just look at how the stock market reacted in the 15 minutes afterward. If I want to know who is going to win the US presidential election, I could follow the news for hours and hours and make a guess, or just look on Intrade for one minute.
Act Rationally
Economics teaches a model of how “rational people” act. This helps you notice when you are departing from the model of rationality and think about doing things differently. For instance, write off sunk costs and make decisions at the margin.
All in all, I’m not sure if economics is the most useful subject to learn (what are other contenders?), but it does seem to have a fair amount of practical utility.
So, I think I’m going to write a sequence called “Economics in 5 concepts,” which tries to give a description of opportunity cost, prices carrying information, feedback and equilibria, specialization of labor / comparative advantage / gains from trade, and the seen and the unseen. Anything I’m missing / shouldn’t write about / should consider?
I’m currently retraining from a moderately successful career in IT into econ/maths, and explaining my motives for this is always an uphill struggle against people’s misapprehension of what economics is even about.
In many ways it’s kind of an invisible discipline. There are all sorts of benevolent aspects of everyday life which are clearly the product of chemistry or engineering or medical science, but it’s hard to assemble a collection of concrete, object-level stuff and say “all these things were made by economists!”
There’s also a problem of motive when it comes to a lay appreciation of economics. No-one develops an amateur interest in physics because they have a crazy partisan political agenda, but in r/Economics/ there are thrice-weekly arguments on the gold standard you can set your watch by. It takes a special kind of nerdery to be interested in something for the sake of interest, but a lot of cranky trouble-causers speak with great unearned authority on economic subjects because they’re really pissed off about something.
“There are all sorts of benevolent aspects of everyday life which are clearly the product of chemistry or engineering or medical science, but it’s hard to assemble a collection of concrete, object-level stuff and say “all these things were made by economists!”′
There is a book, “Better Living Through Economics”, (the title inspired, I assume, by “Better Living Through Chemistry”) that explains some of this. It is largely stories about economists getting the government to work better- ending the draft, stabilizing prices, et cetera.
I think we need a sexy fictional economist who solves crimes. If Robert Langdon can uncover millenia-old religious conspiracies and save Rome with an art degree, imagine what someone numerate could do.
Good post. Programming would be my vote for higher level subject most useful to individuals. Then economics (given my bias that it’s my area of focus). And really it’s helpful to be proficient in both so you can be a good data analyst.
But I do think you underestimate how important economics is for “how to run a government.” Yes, there are a huge number of near Pareto efficient policies that economists recommend that politicians don’t implement for political reasons, but one of the biggest differences between the wealth of nations is how well they apply the lessons of economics. For the most part, countries have access to the same level of science and technology; some rich countries (Hong Kong) have far less natural resources than many that are much poorer; but some countries do a much better job of implementing a good economic collection of rules and regulations and that’s why they’re so much richer. Teaching economics (especially to the ‘elites’ who will run day run the country) is hugely important for maintaining those policies.
I study/teach economics for a living, this made my try to think about why it is useful (besides that it gives me a job).
How To Run A Government
Economics has a lot to say about which government policies will make people better off or worse off. This is a big reason I got interested in economics, but its not very practical for the vast majority of people, who have essentially no influence over government policy (and in fact it is economists who are famous for arguing, perhaps incorrectly, that votes don’t matter).
Understand How The World Works
It’s always nice to just understand more, but in particular I think some insights are likely to make you happier. For instance, you may worry about not being a good person because you are selfish, but economics argues that in market settings being selfish often helps others too. Several insights of economics make you appreciate other people more: knowing that their specialization and labor is what makes the world, and you, so rich- people of different countries, religions, et cetera cooperate to make everything from your computer to your pencil. Whenever I get annoyed at the crowd in a coffeeshop or on the subway, economics reminds me that if it weren’t for the other customers, there would be no coffeeshop or subway. Learning about subjective value helps you not to look down on others so much for “bad taste” in music, books, et c.
Practical Skills
Econometrics (basically our word for data analysis) is the main practical skill of economics. It is a great tool for figuring out how the world works. I use it for academic research, but many private sector realize the value of econometrics (though they may call it analytics or data science or forecasting or something else). Another skill that only a few economists really master is mechanism design, which has been used to sell ads and spectrum and allocate kidneys, students, and medical residents.
Save Money
A lot of people get the idea that economics is about “how to make money”, but anyone seeing my paychecks would realize I’m not the one to teach that. We do have some things to say about how not to throw money away though. By learning about the Efficient Markets Hypothesis and investing in broad index funds, you will avoid losing money to fund managers fees and brokerage trading costs, and avoid the possible catastrophic failure of an undiversified portfolio. Sometimes you can use efficient markets to save time as well. If I want to know whether the recent jobs numbers were better than expected, I could read a lot about it, or just look at how the stock market reacted in the 15 minutes afterward. If I want to know who is going to win the US presidential election, I could follow the news for hours and hours and make a guess, or just look on Intrade for one minute.
Act Rationally
Economics teaches a model of how “rational people” act. This helps you notice when you are departing from the model of rationality and think about doing things differently. For instance, write off sunk costs and make decisions at the margin.
All in all, I’m not sure if economics is the most useful subject to learn (what are other contenders?), but it does seem to have a fair amount of practical utility.
(crossposted)
So, I think I’m going to write a sequence called “Economics in 5 concepts,” which tries to give a description of opportunity cost, prices carrying information, feedback and equilibria, specialization of labor / comparative advantage / gains from trade, and the seen and the unseen. Anything I’m missing / shouldn’t write about / should consider?
I’m currently retraining from a moderately successful career in IT into econ/maths, and explaining my motives for this is always an uphill struggle against people’s misapprehension of what economics is even about.
In many ways it’s kind of an invisible discipline. There are all sorts of benevolent aspects of everyday life which are clearly the product of chemistry or engineering or medical science, but it’s hard to assemble a collection of concrete, object-level stuff and say “all these things were made by economists!”
There’s also a problem of motive when it comes to a lay appreciation of economics. No-one develops an amateur interest in physics because they have a crazy partisan political agenda, but in r/Economics/ there are thrice-weekly arguments on the gold standard you can set your watch by. It takes a special kind of nerdery to be interested in something for the sake of interest, but a lot of cranky trouble-causers speak with great unearned authority on economic subjects because they’re really pissed off about something.
There is a book, “Better Living Through Economics”, (the title inspired, I assume, by “Better Living Through Chemistry”) that explains some of this. It is largely stories about economists getting the government to work better- ending the draft, stabilizing prices, et cetera.
I think we need a sexy fictional economist who solves crimes. If Robert Langdon can uncover millenia-old religious conspiracies and save Rome with an art degree, imagine what someone numerate could do.
Good post. Programming would be my vote for higher level subject most useful to individuals. Then economics (given my bias that it’s my area of focus). And really it’s helpful to be proficient in both so you can be a good data analyst.
But I do think you underestimate how important economics is for “how to run a government.” Yes, there are a huge number of near Pareto efficient policies that economists recommend that politicians don’t implement for political reasons, but one of the biggest differences between the wealth of nations is how well they apply the lessons of economics. For the most part, countries have access to the same level of science and technology; some rich countries (Hong Kong) have far less natural resources than many that are much poorer; but some countries do a much better job of implementing a good economic collection of rules and regulations and that’s why they’re so much richer. Teaching economics (especially to the ‘elites’ who will run day run the country) is hugely important for maintaining those policies.