Economics helps us identify the policy measures that encourage prosperity and avoid inefficiency, making it a crucial driver in the search for sustainable growth.
The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.
—Friedrich August von Hayek
The human race’s curiosity has expressed itself in the creation of various fields of study that examine specific aspects of the world around us. The ‘natural’ sciences like physics and chemistry study the behaviour of the basic particles and elements of the universe and their interactions with each other. The ‘humanities’, on the other hand, study the creations of humans, such as literary texts and the arts.
Interspersed between these two is economics—a ‘social science’ which deploys a highly quantitative, data-driven, problem-solving approach towards understanding the behaviour of human beings. Economics, therefore, is the field of study that is best placed to track, study, project and predict human behaviour; and as such is one of the most important and relevant skills for the world today, helping us choose wisely when it comes to our personal, social and professional lives.
Economics for sustainable growth
Understanding humans, and their motivations, is critical to designing initiatives that can have social and economic impacts upon society at a local, regional and national level. This isn’t an idealised notion—whole nations have transformed themselves for the better through the incorporation of economic principles in their policies, like China, South Korea and Singapore, to name a few.
China lifted over 200 million people out of extreme poverty since the 1980s due to a revision of economic policies, materially improving the lives of nearly 2.6% of the world’s population. This makes it clear that in a supportive policy environment, the impact that economics can have is virtually limitless. Economics helps us identify the policy measures that encourage prosperity and avoid inefficiency, making it a crucial driver in the search for sustainable growth.
Becoming an economist is a sound professional choice
Studying economics provides one with not just an understanding of human behaviour, but also cultivates in students the problem-solving, analytical, communication and persuasion skills that are critical for success in today’s job market. In business, economists can provide key insights into how to make a product or service appeal more to customers by de-constructing their incentives and desires. The deep insights into customer behaviour, business strategy and volatile markets that economics provides can help companies make intelligent decisions to promote greater business growth and success.
Companies are always eager to find better ways to make their value proposition clearer and more compelling; this is why skilled economists and economic analysts are in heavy demand across industries today. Following up the study of economics with an MBA opens up lucrative opportunities in marketing, finance and consulting, making it a vital first step onto a career path with exciting growth opportunities and prospects. This is one of the reasons that graduates in economics and postgraduates with a background in economics command some of the highest wages in the global job market.
Economics is everyday life
In our daily lives, we are called to make choices at our homes and in the marketplace, how much to spend and save, how to allocate our savings between different kinds of financial assets, whether to take a regular cab or an Uber, how much to pay for health insurance, whether to switch jobs, to move to a different city, where to go for vacation, and so on. These decisions are so much a part of our everyday life that they are also the domain of much of what politicians constantly make promises to us about.
How should we evaluate what our elected leaders tell us? How should we participate in a democracy as responsible, informed citizens? We cannot answer such questions without having a proper understanding of economics. It is a basic civic literacy requirement. It teaches us how to make choices, how to interact in society, how to evaluate the work being done by our elected representatives and much more. Every citizen in a country needs to know economics so as to live and participate meaningfully in the society.
Not just demand and supply
Economics underpins many of the phenomena unfolding around us every day. From driving Jio to offering free internet along with phone services and the use of box office earnings to determine the next Bollywood star, economics also determines the price and the variety of mango you will choose to buy once the monsoon arrives. India needs more of its citizens educated about the basic principles of economics so that they can understand the forces that materially move and determine the markets and prices around them.
As the Indian economy becomes more sophisticated and more connected with the rest of the world, the demand for economists in government, business and policy-making will rise. India’s economy needs a greater participation from those well-versed with economic principles, to guide the discussions in corporate boardrooms and governmental organisations so that the country can show greater growth. India has weathered more than seven decades of economic mismanagement, borne largely out of widespread economic illiteracy. This certainly needs to change.
By: Indradeep Ghosh
The author is associate professor and faculty dean, Meghnad Desai Academy of Economics, Mumbai. Views are personal