The Importance of Economics

Readers Question: What are the importance of economics?

Firstly, here is a rather, frivolous look at 10 reasons to study economics

On a more serious note. The importance of economics includes the following:

  1. Dealing with a shortage of Raw Materials. Economics provides a mechanism for looking at possible consequences as we run short of raw materials such as gas and oil.
  2. How to distribute resources in society. To what extent should we redistribute income in society? Is inequality necessary to create economic incentives or does inequality create more economic problems.
  3. The Principle of Opportunity Cost. Politicians win elections by promising more spending and cutting taxes. This is because lower taxes and more spending is what voters want to hear. However, an economist will be aware that everything has an opportunity cost. Spend more on subsidising free university education, and it means higher taxes and lower spending elsewhere. Giving students £4,000 a year to spend at university may be a noble ideal. But, is it the best use of public money? Are there not better uses of money?
  4. Social efficiency. The free market leads to countless examples of market failure. I feel one of the best uses of economics is to provide solutions to overcoming market failure. For example, driving into the centre of town creates negative externalities such as pollution and congestion. There is overconsumption. An economist can suggest a tax on driving into towns to internalise the externality. Of course new taxes are not popular, but, it would provide a better solution for society. You may not want to pay £10 a week to drive into a city centre. But, if it saved you 2 hours of sitting in a jam, then maybe you would be quite happy to pay it.
  5. Knowledge When You are Unemployed and waiting in the queue for unemployment benefits, as an economist you will know WHY you are unemployed, which is of course a great comfort.

More reading on importance of economics

Limitations of Economics

19 Responses to The Importance of Economics

  1. COLLINS ATTAH OGOE November 3, 2009 at 11:21 am #

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  2. pooja December 17, 2009 at 9:55 am #

    i want to know the importance of business economics. pls send me.

  3. jane madu March 25, 2010 at 10:51 am #

    plz i need more details about the importance of economics

  4. dineo April 16, 2010 at 1:55 pm #

    this is too brief please i need more more more. thank you

  5. Newbie in college June 17, 2010 at 12:58 pm #

    well tnx for the info finaly you help me in my homework but wish you give me more more info so that wether if i need to know maybe you can help me

  6. james August 16, 2010 at 3:57 am #

    ineed more results about economics to businee

  7. parmeet August 21, 2010 at 5:20 am #

    businesss/Managerial economics is the science of directing scarce resources to manage cost effectively. It consists of three branches: competitive markets, market power, and imperfect markets. A market consists of buyers and sellers that communicate with each other for voluntary exchange. Whether a market is local or global, the same managerial economics apply.

  8. Emmanuel Kankam September 22, 2010 at 6:11 am #

    Thanks for the notes but i think they are too concise and we the African students would be very grateful if you could elaborate more on the topics cos you guys are like our saviors now.thanks.

  9. ebenezer September 27, 2010 at 8:21 pm #

    economics to a large extent is a tool for analysis but then to some economies it is more than useless. Discuss

  10. kathleen November 22, 2010 at 3:25 am #

    ..pls i need more details about economics…

  11. Augusta January 27, 2011 at 4:01 pm #

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  12. jf March 2, 2011 at 2:15 pm #

    more details on economic principals

  13. mary May 14, 2011 at 6:24 pm #

    make me understant.this too brief

  14. regell June 7, 2011 at 2:04 am #

    why is that economics is important to our daily life?
    how it help us to solve problems?
    make me understand the economics

  15. reymart June 22, 2011 at 3:49 am #

    please. . . i need more details about economics too. Tnx

  16. Lwambaga, F.I July 19, 2011 at 4:03 pm #

    What are the Anglican christians’ posistive and negative responces to the economy in Africa? What were the economical positives and negatives effects of the western colonial missionaries’ theologica teaching in Africa?

  17. Arjunan August 8, 2011 at 2:08 pm #

    Ohhh i need more about improtants of business economics>>!

  18. DOMINIC ADDAI August 9, 2011 at 1:51 pm #

    PLEASE I WANT ABOUT ONE MILLION DEFINITIONS OF ECONOMICS AND HUNDRED MILLION IMPORTANCE OF ECONOMICS.

  19. jovelyn aga-id November 7, 2012 at 12:50 pm #

    pls,.i need more info about importance of economics tnx its a great help for me since my major is social studies,.tnx