People do not act rationally. We make the same mistakes over and over, manipulated by an irrationally high aversion to loss and a tendency to maintain a potentially counterproductive status quo. Pioneers such as Richard Thaler, who won the Nobel Prize in economic sciences this year, are working to identify these types of inherent mistakes.
The ability of economics to pinpoint and analyze recurrent flaws in human reasoning revives a conversation about the place of economics in the general college student’s education. Students should seek out economics courses in order to learn this critical evaluation.
Economics is, at its most fundamental level, a study of how people handle the scarcity of resources and respond to incentives. It explains why our society has shifted to one where people, and countries, specialize in different things and achieve different results. It can also help individuals evaluate the constantly shifting conversation on international trade in terms of economic facts. Understanding tariffs and international trade can help students make informed decisions about which politicians to support during times of shifting foreign policy. This is especially imperative today, in light of the Trump administration’s continuing hostility towards international trade.
In addition to helping students understand the world, studying economics prepares them to think critically about government policies. Certain policies can be extremely attractive but may carry significant economic drawbacks, and it’s important that individuals are able to weigh the costs and benefits of such legislation. By introducing students to basic financial and economic principles, economics teaches students to be critical citizens and voters. This type of critical thinking is growing increasingly necessary to sort through the current, heated state of political dialogue.
More importantly, economics demands critical evaluation of one’s own mind and decisions. Rather than blindly follow their gut instinct, economics teaches students to be aware of their basic irrationality and second guess their impulses.
After my first microeconomics class, I found myself changing the way I responded to the world, applying economic principles to realms as large as the stock market or as small as the act of going grocery shopping. Studying economics, and later working as an economics teaching assistant, I learned to review my decisions and the world around me more critically. Economics changed me in a way no class had done before or has done since, and has shaped me into a more effective citizen and individual.
These benefits are especially important in the wake of new research and the changing political and international climate. Economics can, now more than ever, help students orient themselves in the world. Students should choose to enroll in an economics course to learn these skills and prepare themselves to be effective citizens and individuals.
Grace Leake is a Plan II and business freshman. Follow her on Twitter @grace_leake.