What is Economics?
Life is about choices. However, individuals, firms and governments cannot have everything they want; their desires are constrained by both time and resources, and therefore they must choose from a range of possible options.
Does an individual want more leisure time or a higher income? Does a government want to spend more money on hospitals or more on defence? Does a firm cut prices or advertise more to increase sales?
Economics studies the way in which these choices are made, and can inform policy in areas as diverse as education, the environment, commerce, transport, globalisation and health.
Economics in action
Economics is not just something that exists in textbooks. It's all around us. Each one of us is an economic animal, hard-wired to make economic decisions. We do so instinctively, almost without thinking.
Understanding why we do what we do is key to the economist's role. It requires an appreciation of many related disciplines such as politics, mathematics, statistics, sociology and psychology. Blending these elements into a coherent and effective framework is what makes an economist that little bit special.
Examples of economic research from the University of Nottingham
How do individuals repay their debt? The balance-matching heuristic
Where art and science meet
Sir John Hicks, a famous Nobel Laureate, once said that a good economist should be able to communicate economic thinking in words, diagrams and algebra. So an economist must be multi-talented. It's not just about maths.
For sure, mathematics is one of the most powerful tools in the economist kit, but there's no substitute for economic intuition. Developing that intuition takes time but once you begin to think like an economist, you'll be able to communicate like one too - clearly, logically and imaginatively.
Economic thinking
It's what will set you apart from other talented graduates. Economists see the world differently, through the lens of economics.
For example, when asked "What's the optimal level of pollution in your town or city?" a common response is to say "Zero, of course!", but an economist is likely to say that the level will depend on society's preferences, but the optimal level is NOT going to be zero.
What the economist recognises is that pollution is a bi-product of almost all economic activity, the benefits from which society may be willing to offset some pollution. That's the lens of economics.
How to think like an economist
There are some important steps to economic thinking:
- Carefully observe
- Extract what is vital to simplify a potentially complex situation into a manageable problem (what economists call a model)
- Using established principles, analyse and reason (this will offer insight into the economic behaviour being investigated)
- Gather data to evaluate how realistic the insights from the model actually are
- Reconsider the things that were discarded at the first stage to evaluate whether it's valid to ignore them
- Develop policy advice and implications, acknowledging the limitations and the sensitivity of outcomes to assumptions
It might sound complicated, but by the time you're a Nottingham graduate, it'll be second nature.
Your skill set
Economists are renowned for the skills they possess. They are problem solvers with a talent for recognising the important from the trivial, the ability to think logically and the possession of a sceptical eye for detail. Being data-savvy, they can spot the mis-use of data too.
Why study economics?
Most of us appreciate that economics is an essential cornerstone of how the world works, but many people hugely underestimate quite how fundamental it is to the decisions and interactions that punctuate our day-to-day lives.
Life, after all, is about choices - some mundane, some monumental. Individuals, firms and governments cannot have everything they want: they have to choose, basing their judgments on a variety of constraints. More leisure time versus higher income, price cut versus sales drive, health spending versus defence budget - the solutions to all of these trade-offs are rooted in the principles of economics.
This is why the discipline is about so much more than number-crunching. Economics studies the way choices are made. It can influence thinking and inform policy in areas as diverse education, the environment, commerce, transport, health and globalisation. It offers a chance to shape the world for the better.