Friday, 31 March 2017

Why study economics? Understand the world edition...

John Hewson (former Liberal opposition leader, now Professor at Australian National University) wrote yesterday in the Sydney Morning Herald:
A well-rounded training in economics should be a necessary, but not sufficient, requirement for good judgment along with understanding human and institutional behaviour and an appreciation of the social, political and environmental constraints against which such judgments are made.
Nevertheless, most public policy debates these days see the various vested interests claiming models that, surprisingly, prove their case. You get the distinct impression that these models were generally generated by starting with the desired conclusion, and then working backwards to see what had to be assumed to get that result. Disraeli's three kinds of lies – lies, damned lies, and statistics...
There are calls for education to focus on STEM subjects – science, technology, engineering and maths. I would suggest the urgent need to add economics to the list.
Would that turn STEM into STEEM? Seriously though, there is much to agree with in what Hewson wrote in that article. I encourage you to read it. Using economics to develop a deeper understanding of the world we live in would help people to make better business and policy decisions. This is one of the points we try to make in first-year economics classes at Waikato, from the very first week. Even if you're not studying an economics major, and the extent of your formal economics training will be limited to a single paper like ECON100 or ECON110, even a basic understanding of fundamental economic concepts like the cost-benefit principle, demand-and-supply, and elasticities, can go a long way towards making better decisions.

[HT: "Writer's Den" on the Waikato EDG Facebook group]

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