“Much in Little”
“Economics is everywhere and understanding economics can help you make better decisions and lead a happier life”
- Tyler Cowen
Economics, is a science which understands the meaning of the word “scarcity”. It’s a concept which revolves around choices and alternatives and doesn’t shy away from stomaching the trade-offs. It teaches men how little of what they dream they can design, and it also reminds them how much they can stretch with the blanket they have. In such a drift, it isn’t hard to imagine, how an individual’s life can be so intertwined with economics. After all, aren’t we all a sum of our choices, and aren’t we often challenged to make new choices every day, be it at work, during leisure or it may be a simple matter of whether to consume or to save.
Among these choices, one of the most important any person makes, is his or her college degree. Absurd though it may sound, economics plays a vital role in the ease of getting into a college. An underperforming economy spurs student to research and study more, in hopes of new opportunities. Consequently, the rise in number of people looking for college seats in turn leads to a dearth in college seats and a consequent rise in educational costs, hence making it unaffordable for many. This was in a grand scheme of things, a simple example which showcases how economics interweaves the various facets of life together. It isn’t a surprise really considering how in essence, every resource is finite, and in a sense, essentially scarce, thus our every choice- be it buying a pen or a car- is defined in the boundaries of the limitations called resources. In fact, in a nutshell, the interest rates are all but an indication of how much of a leeway the government itself can afford. This big wide web of interconnections can get overwhelming hence various ideas and concepts are called upon to simply the facets of this colossal science.
Primarily, whenever economists talk about the implications of economy in daily life, they generally highlight upon these facets of life:
i) Economics talks about how a person evaluates how much satisfaction a good or a service gives him compared to a price. Here the principles of economy help him maximize his overall welfare by, for example, helping him rationalize whether is it worth it to get complimentary maintenance with his newly purchased car or not.
ii) It also helps us evaluate the consequences of the purchases we make. For example, many people pay for a gym membership as a new year resolution. But for some or the other reason, they fail to continue. Now for their overall welfare, in this case their mental peace or satisfaction, they write off the membership fees as a sunk cost and maximize marginal utility of their days.
iii) Often for simplicity, economics assumes man is rational, but interesting conclusions and ramifications prop up when it brushes off that assumption and adds in the elements of bias and irrationality into the equation. This leads to its application in a wide range of spheres, ranging from buying a simple tube of toothpaste to big ticket purchases like luxury cars. It takes advantage of present bias, where we overvalue pleasure and take decisions our future self won’t.
It’s amazing how the human mind fails to visualize the various cogs and wheels which ensure the smooth operation of the machine of life. We apply various concepts and theories to understand the various complexities and entanglements of it. We strive to derive a tangent to solve its various mysteries and complications, and in this process, we employ the various tools and facts we have at our disposal. And one such indispensable tool is the understanding of economics. Economics helps us maximize the utility of our very lives, be it a single day or the entirety of it. It showcases the need to smoothen our consumption patterns over the course of lives, highlights the advantages of choices, for example paying off a debt instead of saving for retirement. It’s oft-dubbed as a practice of heartless men, a fool’s errand in this day of modern science, but its real beauty lies in its capability to raise the standard of lives of every individual, state, nation, and the whole world itself, and in connecting the vast world to the various minutiae of life, in realizing the phrase, indeed much can be inferred from a little and a little can mean much.
