An economics course will teach you the fundamentals you need to decipher the graphs you may associate with a typical economics course, as well as the tools to develop a successful business strategy. But, how can you know if studying economics is right for you?
If you’re asking yourself this question, consider the learning outcomes of various economics programs and how they compare to your personal and professional goals.
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.
Options for Studying Economics
There are many options available for those looking to pursue an education in economics. Depending on your personal and professional goals, your current stage in life, and other important factors, you may choose to pursue an undergraduate or graduate economics degree, or online economics courses.
Whether you're new to the business world or an experienced manager, having a thorough understanding of how markets work, pricing strategy, and consumer behavior is essential to success.
Do you want to take your career to the next level? Download our free Guide to Advancing Your Career with Essential Business Skills to learn how enhancing your business knowledge can help you make an impact on your organization and be competitive in the job market.
This post was updated on August 2, 2019. It was originally published on November 30, 2017.