Why study economics?
Considering studying economics at degree level, A-level or self study?
There are plenty of reasons why economics is important and can be interesting to study. There are several benefits to learning about the ways of thinking and key tools of economics.
My eight key reasons why you should study economics are:
- Interest
- Impact
- Ways of thinking
- Understanding personal decisions
- Combining different disciplines
- Useful skills
- Access to jobs
- Mental models for self-employment
Here are some details about these reasons:
Interest
If you find the subject of economics intriguing, you should definitely consider studying economics. Your interest in the subject will motivate you through a degree and you will enjoy it more when you study a subject you find interesting. You may also have the opportunity to do further research in economics, either in the context of a job or in research positions at a university for example.
Impact
How can we make people better off? How can developing countries catch up? What are the impacts of diseases and artificial intelligence? How can we prevent the worst impacts of climate change? Can we prevent a repeat of the 2008 financial crisis?
Economics tries to address these big questions and more.
If you would like to make the world a better place, an economics degree is a really good base for achieving this. It will also allow you to access jobs in policy making and economic development for example.
Ways of thinking
Economics teaches particular ways of thinking.
This includes marginalism, opportunity costs, supply/demand frameworks, principal-agent problems, game theory and several more different frameworks or mental models. These can give rich insights into decision-making in business, politics or in one’s personal life.
You can also come across economics in areas where you would not expect it. Gary Becker, a Nobel Prize winning economist, was known for studying unusual applications of economics.
For example, why do criminals commit crimes and what is the best way to deter crime? He came up with the so called “rotten kid theorem”. Another contribution was to consider under what conditions free markets can improve outcomes for disadvantaged groups.
Understanding personal decisions
Economics starts off with the assumption of rational agents. We use this as a starting point to think about why people buy things – why do we buy the things we buy?
But in reality, consumers are not rational. We also need to consider possible consumer biases. Behavioural economics, an intersection of economics and psychology, explores these biases. How do firms influence your choices to their advantage? Where it is advantageous to you, is it possible to learn to overcome such biases, such as framing and availability biases?
Hyperbolic discounting and procrastination and how it affects decisions from going to the gym to savings and pension decisions. The use in modelling such phenomena is that we can also consider solutions to these problems.
Combining different disciplines
Economics does not just link with psychology.
The subject also links with politics, for example public choice theory – can we model how politicians make decisions or why may politicians change their point of view to gain votes?
Economics also overlaps with philosophy (what is a fair society? What economic goals should individuals and countries have?) and history (why did some countries grow faster than others? What are the origins of money?).
Mathematics is a key tool for an economist. The key areas of mathematics used range from statistics (regression) to calculus and matrices.
Historically, economics has always relied on links with other disciplines. However economics has sometimes come under criticism in recent years for being too insular and not collaborating enough with other areas. Fortunately there are movements that have changed and continue to change how we learn economics at universities. You also usually have the choice of economics modules that overlap with other areas.
Useful skills
While learning economics you often learn to understand statistics.
Particularly beyond A-level, you get to grips with key statistical tools, such as multiple linear regression and machine learning within software like R, Stata or Eviews.
Understanding these tools will help you appreciate both their insights and limitations. These are also key skills for several economics employers.
You can also pick up some so-called “transferable skills”, including problem-solving, data analysis, research skills and more.
Access to jobs
Those with economics degrees are often some of the highest paid, according to various studies. If you are looking for good pay within an office job, then an economics degree can help you achieve that.
More generally, economics degrees offer a lot of job opportunities. From private sector jobs in consulting and banking to public sector work as an economist, to working for think-tanks, NGOs or international organisations, there are so many opportunities within economics. Even beyond pure economics jobs, employers may see economics students as highly employable so you may be able to enter jobs in related or other sectors.
The graphs show the pay for those graduates of the top 8 highest-paying degrees at age 29, compared to a group that did not attend university, after controlling for pre-university background characteristics.
This shows economics as one of the highest paying degrees for both men and women (Source of data: IFS and UK Government).
There are other career options beyond what I have mentioned here. The general point: economics graduates are very highly employable.
Mental models for self employment
Of course you do not have to work a standard desk job having studied economics. Learning a little about economics can help in becoming an entrepreneur or investor.
Supply and demand frameworks, as well as market power models, allow investors to find opportunities and predict the future value of stocks. Forecasting future trends in industries will help spot gaps in the market. You may need to understand labour markets for hiring employees, the principal agent problem for managing employees or creative destruction in understanding how businesses need to evolve over time.
The extra skills that learning economics gives you, including mathematics and statistics, will no doubt help in entrepreneurship too.
Other Questions
How should I write a personal statement for economics university applications?
For the complete economics personal statement guide, click the blue button below:
Key things to think about are your “supercurricular” (not extracurricular) activities. What economics books have you read? Or have you completed other activities like essay competitions, watching an economics lecture, or listening to a podcast episode?
The other key is showing personal takeaways from these activities. Too many students fall into the trap of writing generically about their activities – you need to have details!
I have a lot of advice on this website on economics personal statements. For information about economics university applications, check out this page here.
What are some tips for economics A-level courses?
Understanding the key economics diagrams is a good starting point. The key exam skills of application, analysis and evaluation are critical to improve your grades.
Also doing lots of past papers and practice papers can help improve your answers.
For A-level economics resources, including exam techinque tips, model answers and practice essays, click the link here.
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