About Economics and Why It Is Important

Direct Knowlege Contributor Taylor Bauer
  • By Taylor Bauer, Technical Writer & Digital Marketing Expert
  • Taylor is a writer and SEO manager with a B.S. in Political Communication from Illinois State University. He also received his M.S. in Communications from Illinois State. His background comes from journalism, working at an NPR member station for three years before transitioning to blogging and search engine marketing. He lives in Illinois with his wife and two Toy Australian Sheppards.

About Economics

Goods and services provide society with the things it needs to function correctly. Without food, shelter, and a system within which we can trade these things, you and I would have a hard time gathering what we need to survive. Economics provides us the definitions and theories for the best way to organize these transactions according to different types of systems. Studying the various subjects of economics helps us to understand its importance to society.

Economics is the science behind producing goods and services for consumption. The subject determines the best way different people or organizations can share their manufactured goods with others, using the concept of currency to keep transactions even for all involved. Studying different economic systems and approaches provides citizens with the knowledge to inform personal financial philosophy.

The importance of economics rests in its influence over how much money citizens can earn. Without a functioning definition of successful economics, no society can thrive or grow. Let’s explore the basics of the subject, as well as information everyone should know.

The Definitions of Economics as a Social Science

Although it has many mathematical aspects, economics is ultimately a social science of vast importance. It uses math and science to study parts of society, namely the economy and what drives it. The economy consists of the production and then exchange and distribution of goods and services for money between the various players in the marketplace. The players are all people at their core, but people can form larger groups that act as singular players. For example, households, companies, organizations, and political subdivisions can all be individual players. Economics tries to understand how and why these subjects make the decisions they do primarily by studying the definition of data and creating models. These models are rarely perfect, but they do provide useful insights that help us optimize the economy. You’ll learn more about these insights and the people who make them in this category.

In addition to in-depth topics, the types of economics articles here will provide the first definition for those new to the field. For example, you can read a summary of the kinds of economics here, or get a thorough exploration of the history of the area by checking out this article with more details. For a quick rundown of the big picture, continue reading below.

Macro- vs. Microeconomics

Like the study of physics, which splits into quantum mechanics and special relativity, types of economics also divide into the review of the small and large. This separation didn’t always exist; it came to be after the Great Depression in the 1930s. At that time, John Maynard Keynes introduced the idea of macroeconomics, which takes into consideration the importance of a broad analysis of the economy.

In macroeconomics, aggregate indicators show the relationships between various more significant parts of the economy. Some of the signs include GDP, unemployment rates, and inflation. They can tell economists how the overall economy works, or how it is diverging from what they would expect to happen based on models and calculations.

Microeconomics, on the other hand, concerns itself with the smaller picture. Relative prices of individual goods and the interactions of different players in the market are the main focus. These interactions might mean analyzing a single market for one product or resource or evaluating how monetary policies affect behavior on the micro-level.

Modern Areas Explored in Economics Articles

You’ll find in the types of economics articles here that there are several subfields and topics within the area. But, the following are particularly relevant in today’s world. While they aren’t entirely new, they are becoming more prominent in the modern world. This phenomenon is due to the maturing of civilization on Earth, globalization, and the looming threat of climate change.

Development of Economics Subjects

A few hundred years ago, every country on Earth was still developing, if it even existed yet. Meaning, they were in the process of going through changes that increased their quality of life, political stability, and economic strength. This process usually consists of determining optimal standards of government, establishing production and trade of goods, and growing in terms of financial wealth and power. You can read economics articles here about professionals such as Dean Karlan, who dedicate their careers to this field to address the importance of global poverty.

Eventually, these changes reach a plateau where the country is generally stable and has a high quality of living and good relations with other countries. Changes and improvements still happen, but not on the scale of a developing country. But, not every country has fully completed the development stage. And, having both developed and developing countries coexisting can cause some tensions. This sector of economics looks at these developing countries to better understand the development process in the hopes of helping countries reaches their development goals.

International Economics Subjects

As the world as a whole has gained an increasingly developed status, it has also started to experience globalization frequently. Globalization is the phenomenon of integration and interaction among people across the planet, which wasn’t possible until fairly recently; At least not to the extent that it happens today after the rise of the internet and more natural methods of travel. Through globalization, the amount of trade and other monetary interactions between countries has increased dramatically.

These interactions can be a good thing, but it can also be very complicated due to differences between individual countries. One country might have minimal goods while another has a wide variety. One country might be experiencing extreme inflation or other instability, affecting exchange rates and supply and demand. International economics studies the importance of these different types, which focuses on trade, finance, monetary policies, and political economics. The economist Dave Donaldson provides a great example of a prominent figure in this field. You can read more about him and this exciting area in the economics articles and subjects in this category.

Environmental Economics

One of the consequences of widespread economic development has been its significant adverse effect on the environment. Development for most countries consists of increased production of material goods that use resources. This product is also often powered by machines that produce carbon dioxide or other pollutants. On a small scale, the environment can generate enough resources and reabsorb pollutants. But on a larger global scale, they lead to problems such as global warming, severe weather, and resource shortages.

Environmental economics evaluated the environment and the importance of our interactions with various types of natural things as if it were its market. Resources exist as goods and services, and the ways that we use them have costs and benefits. Treating the environment as a market in this manner prevents individual players from taking advantage of it, and decreases misuse overall.

Other important topics of today include Brexit, European debt situations, the NFIB, and the White House. Read about other new developments in the economics articles and subjects in this category of Direct Knowledge.

Economics Articles for Starting Careers

To become an economist, you’ll typically need a master’s degree or even a Ph.D. But, according to Bureau of Labor Statistics information, this can open the door to very high salaries as the median salary is over 100,000 dollars per year as of 2018. The most common areas of work as an economist are in government and scientific research, development, and consulting. This job typically means sticking to offices on a regular nine-to-five schedule.

For more in-depth coverage of these areas and more, check out the economics articles in this category. The field changes regularly, especially given the rate of change happening in society today. Here, you can keep up with the developments.

Economics Books

Subjects of economics take a look at how systems work. Analysis works by comparing how different players behave in the great game of chess of the market. There are countless complex ways that we use the money to make, buy, sell, and use goods and services. Many factors affect how the process plays out. Use the books and articles to figure out the definition and types of this social science.

Economics Books business analytics team of people working on financial report in the office teamwork closeup of hands

From Old to New

Subjects of economics in some form or another, has been around for thousands of years, forming slowly over time into what we know today. Many ideas created over this period, but many also faded out as we made new advances. In the economics books found here, you can learn about the importance of these past theories. Doing so provides you a good background and the ability to see their effects on modern schools of thought.

You can also find information on mainstream or “orthodox” economics, and even contrast it with the not-so-mainstream. These “heterodox” areas are rising in popularity, especially after events like the 2008 crisis. These events cause people to rethink if what’s mainstream is working, and think about what changes can occur.

Books on Economics as the Science of Society

Subjects of economics have the label of social science. The discipline studies the importance of social aspects like human interactions and behaviors. But it applies scientific principles in analyzing these aspects and presents an exciting mix of commerce, math, and psychology. Many people tend to think of the commerce part first. This thinking is reasonable, given the importance of factors like the production of goods and services. Commerce also includes their distribution, and then consumption of them by people.

Getting Technical

But, the subject of mathematics played a crucial role in advancing economics to more technical and reliable social science. It’s what lets us look at factors like costs, efficiency, uncertainty, and supply and demand on large scales. So prepare for some math-heavy lessons and advanced content while reading economics books.

However, the behavior of consumers and producers affects economic outcomes as well. An entirely new branch – behavioral economics – came from this idea, although it competes with traditional views of rational economics. Under the insights of behavioral economics, people are not always reasonable. Also, things such as culture can affect economies. The effect exists because the culture is essentially a set of values and norms that affect behavior.

On the Practical Side

If you have very minimal experience with economics, a book like Economics – Theory Through Applications may be for you. This book is made for new students or curious readers and focuses on how the economy relates to real life. It will still present some problems to solve using math and theory. Yet, it will not give problems to the extent that some more advanced books do. It’s a great tool not only for learners but for those doing the teaching as well. The book covers many standard topics from intro economics courses. Professors may find it useful for creating lesson plans or as supplemental reading for their students.

If you already have some experience with economics, on the other hand, books like Principles of Economics may be a better fit. While still useful for beginners, it also reaches into intermediate topics and methods. After introducing basic concepts, it then talks about the more tangible impacts of economics across the world.

Putting It All Together

So, the definition of different types of economics isn’t as simple as figuring out how many pizzas a shop can make at a specific time. You have to consider if people in that area, even like pizza. And if they eat during that time of day in that region. Or if the weather affects their desires or maybe other events going on in the area. Humans are just a bit unpredictable sometimes, which turns out to be one of the biggest challenges in economics.

Given all this, prepare to encounter both technical calculations as well as uniquely human factors as you read economics books for a clear definition of importance. This combination is what makes the field so diverse and fascinating.

Economics FAQ

Every citizen should have a basic understanding of the various definitions and types of economics. Read these helpful questions to increase your knowledge on the subject.

What is the best definition of economics?

The best definition of economics is the study of production, trade, and consumption of goods and services. The subject is social science and studies how transactions impact a society’s interactions with one another. The best way to think of economics is that it’s a single system that involves many different parts and topics.

What does it mean to study economics?

If someone studies economics, they study the theories behind organizing the transactions and consumption of goods and services. Every aspect of economics features a different approach to structuring consumers, producers, and distributors. Studying economics includes knowing the different methods as well as their positive and negative influences on society and citizens.

What is the salary of an economist?

An economist usually makes an excellent salary. Most economists make over $100,000 per year and can earn more the longer they work in the field. Like any job, the wage increases with experience and level of education. Someone with a Ph. D. in economics can make six figures near the start of their career if they find the right job.

Does an economics degree pay well?

An economics degree pays well at any level of higher education. Most economics professionals with a Masters or Ph. D. in economic studies make well over six figures or an average of $104,000. A bachelor’s degree in economics can still provide new career earnings upwards of $80,000. Overall, an economics degree pays very well throughout someone’s career.