Economics is a social science involving the study of choices in the face of scarcity and its implications for the use of resources, production of goods and services, economic growth and societal welfare as well as many other complex issues of vital importance to society. It often involves topics like wealth and finance, but it’s not all about money. The central quest of economics is to determine the most effective use of resources to meet private and social goals. Pricing and output, inflation and employment, investment and savings, efficiency and equity, firm strategies and characteristics of markets, money and the banking system, government policies, international trade and globalisation, environmental issues and opportunity costs are just some examples of topics concerning economics.
Economics ranges from the very small to the very large. The study of individual decisions is called microeconomics. The study of the economy as a whole is called macroeconomics.
Microeconomics focuses on the actions of the individual participants in the economy, including individual consumers and businesses. A key microeconomic model is supply and demand, which explains how prices and quantity transacted are determined in individual markets. It involves learning how markets work, when markets fail, and how government policies can affect markets and societal well-being. It also involves studying the characteristics of different markets and how firms may behave and the effects on allocation and distribution of goods, among other aspects.
Macroeconomics is a branch of economics that studies how an overall economy functions and performs. It is concerned with economy-wide phenomena such as inflation, economic growth, national income, unemployment and international trade. Many complex relationships exist and all governments are focussed ensuring good macroeconomic performance to improve the lives of their citizens. At the end of the day, both microeconomics and macroeconomics work hand in hand as what happens at the micro level will add up to affect the macro and macro trends will in turn affect micro decisions.
I need to include Finance Minister Lawrence Wong towards the bottom of this article. I know him personally and in fact he guided me when I was an intern in the Ministry of Trade and Industry! He is a very sharp economist. Another example of the power of learning economics! Today, he is the man who will determine how much money stays in our pockets and whether we get locked down or not !!! Tomorrow, he will be the Prime Minister of Singapore. Is he the only top minister that is economics trained? We will answer this question towards the end of this article.
Firstly, learning economics enables one to acquire critical thinking and evaluation skills. Many examination questions require significant analysis and the ability to explore various angles to an issue. Higher order thinking skills are required. With my experience training senior corporate executives in thinking skills, I am able to coach and mentor my economics tuition students quite effectively including teaching them useful evaluation frameworks such as FEAST (Feasibility, Effectiveness, Appropriateness, Side-effects and Timing).
Did you know that studies have shown that lawyers with a major in economics tend to earn more than other lawyers?
"So, by learning economics, one is also learning to become a successful Entrepreneur, Manager and Business Consultant."Secondly, learning economics enables one to make better decisions. Apart from the thinking skills mentioned above, there are also valuable concepts like opportunity costs and marginal analysis that will enable one to make more correct or optimal decisions. For example, one may have purchased a country club membership in KL, Malaysia. However, the cost of purchase should not influence one’s decision as to whether to drive up there for a holiday. That would require marginal analysis, which is to consider the incremental benefit and cost of another holiday up in KL, and the cost of the membership purchase should not matter. Yet we may hear ourselves say: “Aiyoh, already paid $20,000 for the membership…must use lah.” That may be how we feel, but it is not sound decision making.
Thirdly, firm strategies is a sizeable topic and that includes how firms may compete, how firms may set prices and implement strategies to raise revenues and cut costs. All these knowledge will be very useful for starting and growing a successful business in future. So, by learning economics, one is also learning to become a successful Entrepreneur, Manager and Business Consultant. Not to mention, economists are in high demand by Governments and Banks and those jobs usually pay well.
Did you know that economics is one of the most common degrees of the CEOs of the world’s most successful companies?
Fourthly, the knowledge of economics can enable one to make shrewd investment decisions. With the knowledge of various economic theories, one can forecast changes in asset prices, exchange rates and other economic data which will impact financial investments. (A side effect (benefit?) is that you may become very popular with many trying to fish out insights and forecasts. I speak from personal experience. 😁
There are so many useful concepts in economics that can be applied to investment decisions, business decisions and simply, life decisions. In 2021, I locked in a fixed interest rate loan at 1.12% for 3 years. Most people went for the cheaper flexible interest rates (0.7%?) back then. 1 year on, flexible interest rates are at about 4% and increasing! My fixed rates are still at 1.12% and my savings are earning higher interest than what the bank is earning on my loan. I applied my economics knowledge and saw what was coming around the corner. In 2021, I also liquidated some assets that were denominated in MYR. There are quite a few more examples and these are just to show you how anyone can benefit from some knowledge of economics and it also goes beyond dollars and cents. I could say a lot more but I am incurring high Opportunity Cost as my rest time is highly valued after a long day of classes. 🙂
Fifthly, if we look at the Government of Singapore today, we will find many ministers who are trained in economics. Tharman Shanmugaratnam, Chan Chun Sing, Ong Ye Kung, Heng Swee Keat and Lawrence Wong are some examples. Why is that so? I believe it is due to the cumulation of the first four benefits. A lot of sound policy making benefit from application of economics concepts.
The study of economics is vital to helping us understand the world and even solving problems such as climate change requires very strong micro and macro economics knowledge. The knowledge of economics presents us with a toolbox that can help us tackle a wide range of issues and formulate strategies or policies to achieve objectives. That's why I think learning JC A Level or IB economics is so beneficial.
Gosh! That also means one of my students may have a very high chance of becoming Singapore’s future PM!!!
So there you go! 5 Reasons why you should learn economics! Let's recap:
- To acquire critical thinking and evaluation skills
- To make better decisions
- To become a successful entrepreneur or CEO
- To become a shrewd investor
- To become Singapore's future PM or at least a top policy-maker
The benefits are many. But the learning journey is not that easy…Good thing we have probably the best JC A Level and IB Economics tuition!
Related Post: Is Economics Tuition Necessary?
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About The Economics Tutor
Founded by Kelvin Hong in 1998, The Economics Tutor is one of the leading economics tuition in Singapore. We provide a comprehensive program to guide students in understanding complex economic concepts and applying them through case study analyses, essay writing and discussion of real world events.
For 24 years, the way we teach JC Economics Tuition (A Level Economics Tuition) and IB Economics Tuition classes helped learners appreciate economics and everything it entails on a much larger scale. We take things step-by-step, implement effective techniques in memorising frameworks and give every student the chance to nurture their ideas.
We don’t just solely focus on helping you get stellar grades and perfect scores. We make sure that we also hone the critical thinking skills and investment / business decisions you can use outside the four walls of your classroom.
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