What is Economics?
Economics is both a social science and a business science, and, in the broadest sense, it is concerned with understanding what economies produce, how economies produce what they produce, and who in the economy is able to access what is produced. Within economics, there are two extreme views of this understanding, although economics, as it is practiced, typically lies somewhere in between these two extremes. On one end of the spectrum, market-oriented economists assume that individuals are the most capable of deciding what is best for them, and that free and unfettered markets make available the sort of information that individuals need in order to make the correct decisions, and that those decisions, when aggregated, lead to the best outcome for the greatest number of individuals in society. On the other end of the spectrum are economists that favour hierarchical command and control. These economists tend to believe that markets are inherently incapable of providing the appropriate information to individuals, and, therefore, benevolent planners are capable of bringing about the best outcome for the greatest number of individuals in society. In reality, neither extreme is correct, as markets can fail in a number of circumstances, while the benevolence necessary for success within a planned economy is not a common human trait and often creates unintended negative consequences.
With that as an introduction, it can hopefully now be understood that there is both a philosophical and an analytical aspect to economics. Along those lines, a degree in economics is meant to develop skills related to critical thinking that allows the students to understand the underlying assumptions, interpret data and develop the various chains of logic that are required to advance, support or renounce a particular policy intervention or non-intervention. As an example, one might ask whether or not it is a good idea to avail young South Africans with a wage subsidy to improve their chances of employment. A market-oriented economist would tend to support a wage subsidy, if the subsidy obviously alleviated a market failure, unless that failure was caused by a minimum wage that was set above the equilibrium price. A benevolent planner would tend to support a wage subsidy as long as the subsidy increased youth employment. However, such a policy cannot be considered entirely within a vacuum. It is, unfortunately, plausible that a wage subsidy would increase youth employment, while simultaneously reducing employment opportunities for non-youths. In other words, proper economic analysis is complex and requires one to think â€œoutside the boxâ€, regardless of your philosophical preferences.
What do you think Economics is? The study of money? Wealth? According to the Quality Assurance Agency for Higher Education, Economics is the â€˜study of the factors that influence income, wealth and well-beingâ€™. It is a social science which incorporates maths and statistics as well as having connections with the physical sciences (biology, medicine and physics) and many other disciplines (politics, law, geography, psychology etc).
What makes Economics different from other social sciences?
An economistâ€™s approach follows these 5 steps:
Abstract and simplify to find the problem
Analyse and reason
Organise, absorb, build, analyse and evaluate both qualitative and quantitative data
Criticise the data by looking at its real-life context
And finally create a policy for the problem, realising the limits as well as its productivity
How much maths is there?
Economics does deal with statistical and mathematical problems. The role they take within a degree depends on the institution and your choices. It is worth noting that economists do use information which is of varying numerical types (tables, graphs) and skills to handle this information are required not only through maths and statistics but also computer software.
Economics is not only about maths. It is a social science so its application into real life is visible and constant through many streams; politics, education, the environment, health care or simply your living costs.
So what skills will I have after graduating?
After graduating you should:
Understand economic concepts and principles
Understand economic theory and modelling approaches
Apply quantitative methods and computing techniques across a range of problems
Understand data, its source and content as well as methods that could be used to analyse it
Be able to critically apply economic reasoning to policy issues
Be knowledgeable in a number of specialised areas of economics and be well read within these areas
Understand that a range of approaches can be used for one economic problem resulting in more than one solution.
Great, but how can I apply this to the real working world?
During your undergraduate degree you will come across key concepts (such as opportunity cost, incentives, the relevance of marginal considerations). These key concepts will re-appear not only through your economics education but also when problem-solving in the real world.
Surveys of Economics graduates and their employers reveal the ways in which an Economics degree makes you valuable in the workplace. These include:
An analytical way of thinking
Recognition and clarification
Identifying and comparing solution to problems
Scepticism over the possible misuse of data
The subject-specific skills are:
Abstraction (finding the problem and simplifying it without losing its relevance)
Analysis, deduction and induction (looking at the problem and tracing its core ideas while drawing logical conclusions)
Quantification and design (using data and presenting it in an appropriate, usable form)
Framing (knowing which bits of a problem should be fixed or given in order to solve it).
So what do you do with all of your skills?
What is brilliant about an economics degree is how flexible it is when looking for jobs. Everyone will imagine that you are interested in finance and making lots of money in the City and, with economics, this is definitely a feasible option. However, there are also other options. The private sector offers numerous consultancy, actuary, auditing, trading, finance or banking jobs (the list is endless) along with numerous public sector jobs, HM Treasury, the GES, education (again, another endless list). NGOâ€™s also look for Economics graduates to help with their policy implementations. For more information, keep reading.