What is Economics?
Before attempting to answer why one must study economics, it is only natural to question what economics actually is. One might find several answers, for each economist has their own view on the topic, but all these definitions can broadly be grouped into two categories:
- The Science of 'Wealth'
- The Science of 'Choice'
Neither of the two is incoherent, but they must be considered as complementing each other in answering the vital question.
The Science of Wealth
According to this definition, economics studies the production, consumption, distribution, and accumulation of wealth. Wealth comprises those goods and services which command some value when exchanged and also have value in them because of labour expended on their production. Therefore, broadly, economic value is determined by the labour power spent on the production of the good in question and by its exchange. This is an objective way of studying the economy. Notable scholars in this tradition include Kautilya/Chanakya/Vishnugupta, Adam Smith, John-Baptiste Say, John Stuart Mill, and Thomas Malthus.
The Science of Choice
According to this definition, economics studies human behaviour as a relationship between ends and scarce means which have alternative uses. It is assumed that human wants are unlimited while resources are scarce. Thus, one is faced with the problem of choice at every turn - the decisions forced upon us by the relative scarcity of resources compared to our unlimited wants. Here, economic value is determined by the importance an individual places on a good for the achievement of their desired ends. This is a subjective way of studying the economy. Notable scholars in this tradition include Alfred Marshall, Lionel Robbins, William Stanley, Leon Walras, and Carl Menger.
WHY STUDY ECONOMICS?
I believe the following piece by Amit Goyal encapsulates the essence of why one should study economics: