WHY STUDY ECONOMICS?

At its core, economics is the study of how individuals, groups, and nations manage and use resources. Students who choose to study economics not only gain the skills needed to understand complex markets, but come away with strong analytical and problem-solving skills, as well as business acumen necessary to succeed in the professional world. In fact, economics can be useful for professionals in all industries, not just in business.

ADVANTAGES OF STUDYING ECONOMICS

Here’s a look at five of the top advantages of studying economics and how it can benefit both your organization and career:

1. You'll Expand Your Vocabulary

Whether it’s scarcity (limited resources), opportunity cost (what must be given up to obtain something else), or equilibrium (the price at which demand equals supply), an economics course will give you a fluency in fundamental terms needed to understand how markets work. Even if you don’t use these words often in your current role, studying these economic terms will give you a better understanding of market dynamics as a whole and how they apply to your organization.

2. And Put It Into Practice

Economics isn’t just learning a fancy set of words, it’s actually using them to develop a viable business strategy. When you understand these terms, you can use theories and frameworks like Porter’s Five Forces and SWOT analyses to assess situations and make a variety of economic decisions for your organization, like whether to pursue a bundled or unbundled pricing model, or the best ways to maximize revenues.

3. You’ll Understand Your Own Spending Habits

Economics will teach you about how your organization and its market behaves, but you’ll also gain insight into your own spending habits and values. For example, Willingness to Pay (WTP) is the maximum amount someone is willing to pay for a good or service. There’s frequently a gap between hypothetical and actual WTP, and learning about it will help you decode your own behavior and enable you to make economically sound decisions.

Kathy used the concepts she learned in Economics for Managers to maximize her income for a rental property.

“I recently had to look for a new tenant to rent a property I own,” she said. “The real estate agent suggested a price based off of market comparisons. I didn't want to assume what the WTP would be for the property, especially since I thought I could get more. Since supply was in demand, I listed it much higher and ended up getting it rented in two weeks.”

4. It’s More Than Demand Curves

Many people think of economics as just curves, models, and relationships, but in reality, economics is much more nuanced. Much of economic theory is based on assumptions of how people behave rationally, but it’s important to know what to do when those assumptions fail. Learning about cognitive biases that affect our economic decision-making processes arms you with the tools to predict human behavior in the real world, whether people act rationally or irrationally.

5. You’ll Learn How to Leverage Economic Tools

Learning economic theory is one thing, but developing the tools to make business decisions is another. Economics will teach you the basics and also give you concrete tools for analysis. For example, conjoint analysis is a statistical approach to measuring consumer demand for specific product features. This tool will allow you to get at the surprisingly complicated feature versus price tradeoffs that consumers make every day.

For example, pretend you work for Apple Inc. and you want to know what part of the iPhone you should improve: Battery life, screen size, or camera. A conjoint analysis will let you know which improvements customers care about and which are worth the company’s time and money.