Economics isn’t just the study of the economics of countries, governments, and societies; it also looks at smaller-scale systems, including those unrelated to money or products. Read on to learn about some of the many areas within economics.
Simply put, in this approach attention is a finite resource that each person only has so much of. The idea of the attention economy is that an individual’s attention is a rare commodity that must be utilized efficiently and effectively to acquire effective marketing.
It is especially relevant in the age of the internet where attention-grabbing information and content is increasingly abundant. This area of economics can be seen in advertising and website design where companies go to great lengths to take into account what is most relevant to their target audience in order to grab their attention as soon as possible. It can also be applied to areas of education in order to optimize learning behaviors.
This area of economics takes into account the human aspects of the economy. People make up the economy, and we have plenty of quirks when it comes to our emotions, psychology, and social pressures. These quirks affect how we make economic decisions, and thus affect the economy as a whole. Other more classical theories don’t take these factors into account, resulting in varying conclusions.
The field uses insights from psychology and neuroscience, as well as microeconomics. The three dominating themes of study are heuristics, framing, and market inefficiencies. These essentially evaluate how people simplify decisions using mental shortcuts, anecdotes, stereotypes, and non-rational decision making.
Bioeconomics may refer a few different areas of study. It includes one theory by Nicholos Roegen, which views human economic endeavors merely as extensions of biological survival. It is more commonly the term used to describe the study of living resource dynamics using economic models, as well as the study of economic systems using the law of thermodynamics.
For the former, bioeconomics looks at the economics of how resources such as fisheries or forests are shared between people. For the later, bioeconomics looks at economic systems from a mathematical perspective which treats them almost as physical bodies gaining and losing “energy,” being time, money, and resources.
Classical economics is a broad term that describes the school of thought that originated and flourished in Britain between the late 18th to mid-19th century. It considers that economics works best when every individual is given the freedom to pursue their self-interest in the free and open world of competition.
Principle ideas in this field include the invisible hand, division of labor, laws of production and exchange, free trade, the dangers of monopolies, and the importance of competition. Many of the ideas of this topic remain important and applicable today. However, neoclassical economics is the current principal school of thought.
Consumer economics is a branch of economics that focuses on smaller units of the economy. This means looking at units of individuals, consumers, or families as opposed to business or government units considered by traditional economics.
It studies the influences and choices that shape a consumer’s activities, including financial planning and policies that affect families. It is especially important for evaluating economic changes which occur after societal changes concerning family units, such as women entering the work force.
This theory in economics studies the role of contractual arrangements between economic actors. An important aspect of the theory is that contracts often involve asymmetric information where one signing party has more information than the other.
The theory also looks at decision making with regards to this asymmetric information and other factors to determine optimal decisions. The typical situations used in contract theory are called signaling, moral hazard, and adverse selection. Each of these aims to determine the best motivation for appropriate decisions regarding contractual deals.
Development economics is the branch of economics that centers on improving economic, fiscal, and social conditions in underdeveloped countries. As a discipline, it considers factors such as education, health, domestic principles, working conditions, and market conditions. It seeks to establish strategies that can aid developing nations and helps in the analysis of opportunities and how they can be applied.
Improving the situation of developing countries is a major concern in the modern world. Previously, all countries were developing or entirely undeveloped. Now, those that have reached developed status can use their stability and resources to aid other people in improving their quality of life. This also helps the developed countries because certain qualities of undeveloped countries can have negative effects on the global environment and economy.
Econometrics involves the application and quantitative analysis of economic phenomena. Using statistical models provides empirical evidence of how economic relationships function. It also allows economists to sift through extremely large amounts of data in order to find these otherwise hidden relationships.
The most common tools used in the field are multiple linear regression, statistical theory, and mathematical statistics. These are used to find unbiased, efficient, and consistent economic estimators.
Energy economics deals with applying economics to energy situations. Subjects discussed inside the conversion, use, and exploitation of energy and its markets. The main issues center around primary fuels such as fossil fuels and renewables.
The field is increasingly important as certain fuels encourage negative consequences such as climate change. Their competition and cost-benefit analysis with other cleaner and more sustainable fuels is an important area of study as we try to determine how to proceed in terms of energy usage.
Entrepreneurial economics is the field of economics that looks at the role of people starting new businesses that contribute to society. Entrepreneurs and their businesses are necessary for growth of the economy because they combine the factors of production. This combination creates profit, therefore driving economic growth.
Thus, entrepreneurship is critical for explaining and supporting long-term growth. However, mainstream economics does not always properly account for it, making entrepreneurial economics critical for future progress.
Environmental economics examines the relationship between the environment and the economy. Primarily, it studies natural resources, their use and extraction, and waste products that return to the environment. Each of these aspects interacts with economies of every size, since society is located within the natural environment.
Many people think that environmentally friendly practices and policies will be expensive, thus hurting the economy; but this is a short-sighted view. The reality is that damaging the environment will be much more costly in the long run. Some costly effects of climate change include dwindling food supplies, damages from natural disasters, and health problems from pollution.
This area of economics is all about the money, even more so than economics as a whole. However, as opposed to the macroeconomic focus of monetary economics, it has a microeconomic focus. It focuses on financial and monetary variables of the economy, such as prices and interest rates.
Because financial decisions often take into account potential events as related to portfolios, individual stocks, and the market in general, financial economics keeps an eye on these events as well. It uses microeconomics and decision theory to try to make predictions about how financial decisions will be made. This means taking into account uncertainty in environments over space and time. The models and predictions given by financial economics concern themselves more with being mathematically consistent than being consistent with economic theories of the time.
Free Market Economics
Free market economics depends on the interaction of supply and demand of goods and products in order to reach equilibrium. In this equilibrium, all needs of players within the economic are met without intervention of government.
This means that tariffs or other regulations are not imposed by regulating entities, and prices are determined by consumers. While perfect free markets generally don’t exist, certain parts of free markets and their ideology make up important parts of many modern capitalist and other economies.
General economics is a college major that provides students with the foundations of economic knowledge. This is a good place to start for a student who is unsure of what specific area of economics fits them best. They will start off with classes in micro- and macroeconomics. These areas cover markets, production, supply and demand, monetary and fiscal policy, and business cycles.
From there, students can take advantage of many opportunities to explore various other aspects of economics. Through testing different fields and topics, students can figure out their ideal niche for future study or careers.
Green economics is an economic methodology which aims to create harmony between people and nature. The theories of green economics involve various ideas dealing with the interconnected relationship between the environment and the people living in it.
In this model, nature and components of the environment have value to the economy. They not only provide valuable resources as economic input, but environmental conditions such as natural disasters or climate change also have other less direct effects on the economy. And, vice versa, the outputs of the economy affect how the environment functions. This creates potential for a viscous cycle if we don’t take these effects into account through green economics.
This is a field of economics which looks specifically at healthcare. Healthcare is deserving of its own field of study due to its unique economic situation compared to other goods in the economy. It experiences interactions with government, asymmetric information, third-party agents, and barriers to entry that other goods do not.
Thus, health economics deals with issues related to the behavior, efficiency, and value in the production, and consumption of healthcare under these unique circumstances. This understanding can then help with planning, budgeting, monitoring, and supplying healthcare.
This topic in economics has grown significantly in the last century due to the rise of globalization. The countries of the world are more interconnected than ever, and their economies interact on an intricate level. Trade, migration, and investment are the main areas in which international economics evaluates the differences between countries and how they affect each other.
The goal of international economics is to understand the consequences and patterns of interactions and trades between citizens of different countries. The more differences two countries have, the larger their effects will be on one another during interactions. Developing countries are especially vulnerable to decisions of developed countries, even when the developed country might feel it has only made a small change. This makes this field important when it comes to evaluating and promoting development.
Law and Economics
Also known as economic analysis of law, this field applies economic theory to the analysis of legal areas. It especially uses microeconomic theory in order to explain the different effects of the law. This helps determine which laws have accomplished their goals, and which new laws will be effective. With law and economics, we can ensure that laws are economically efficient and beneficial after all of the effort involved in enacting them.
Mathematical economics applies mathematical methods to analyze problems in economics. This allows economics to conduct tests with quantifiable results leading to models for predicting future economic activity.
As technology has improved over time, so has mathematical economics. More computing power means that larger data sets and more complicated models can solve larger problems with more confident results. Some of these applied methods include mathematical programming, matrix algebra, differential equations, and other advanced computational methods.
Real Estate Economics
Real Estate is a huge part of the general economy, both causing huge growth and huge crashes over time. This area of economics evaluates real estate markets to help explain and predict the patterns of prices, demand, and supply of real estate.
While it is closely related to housing economics, it does not concentrate on only housing. Both analyze trends in supply and demand, urban economics, surveys, and finance. The main players being analyzed in real estate economics include developers, owners, renters, and renovators. But facilitators such as banks, brokers, lawyers and regulators are also important for real estate transactions. Their actions have actually contributed significantly to events such as real estate crashes, making them important parts of this field.
Socialist economics refers to a set of economic theories and practices associated with socialist ideology. The goal is to ensure equal opportunity and welfare to the people in the society. The system is based on public ownership of the means of production such that production leads directly to use of outputs. Unlike the free market economy, socialist economies have abundant government intervention.