Why Should We Study Economics?
Once we have an idea what our subject is, the next question is whether it is worth studying. Given that you are reading this essay, you must have some notion that it could be useful. But if you don’t intend to become a professor of economics, what can you gain from learning about it? One of the benefits of studying economics is a deeper understanding of our own situation as acting humans. For instance, people often fail to properly account for the cost of their choices. Once we understand that our costs are measured in terms of our foregone alternatives, we might have a very different view of some common choices. Let's look at a mundane example. We all know someone who has spent a great deal of time on some home improvement project. Perhaps this person undertook the project for sheer enjoyment. Economics will not attempt to recommend something else that would have been more enjoyable—it is not a self-improvement guide! But often, the "do-it-yourselfer" will say that he is doing the work to "save money." "Look," he’ll tell you, "it would have cost me $5,000 to get my roof done professionally. I managed to do it for only $1,000 in materials." An economist is able to point out that his calculation is faulty, and that he may have acted contrary to his own purpose. He has not taken into account the cost of his foregone opportunities. If the job took him 100 hours, and he could have put this time in at work and earned an additional $8,000, he has actually suffered a large monetary loss by doing the job himself. This example turns on dollars and cents, but in other cases, it is psychic costs that we fail to account for properly. When a philanderer cheats on his wife, we may wonder if he has fully considered the costs involved. Perhaps he has, in which case economics can turn the problem over to ethics and religion. But all too often, people take account of the immediately visible profit from an action and fail to account for the less...
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