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What Is Economics?

Economics is the study of how people choose to use resources.

Resources include the time and talent people have available, the land, buildings, equipment, and other tools on hand, and the knowledge of how to combine them to create useful products and services.

Important choices involve how much time to devote to work, to school, and to leisure, how many dollars to spend and how many to save, how to combine resources to produce goods and services, and how to vote and shape the level of taxes and the role of government.

Often, people appear to use their resources to improve their well-being. Well-being includes the satisfaction people gain from the products and services they choose to consume, from their time spent in leisure and with family and community as well as in jobs, and the security and services provided by effective governments. Sometimes, however, people appear to use their resources in ways that don't improve their well-being.

In short, economics includes the study of labor, land, and investments, of money, income, and production, and of taxes and government expenditures. Economists seek to measure well-being, to learn how well-being may increase overtime, and to evaluate the well-being of the rich and the poor. The most famous book in economics is the Inquiry into the Nature and Causes of The Wealth of Nations written by Adam Smith, and published in 1776 in Scotland.

Although the behavior of individuals is important, economics also addresses the collective behavior of businesses and industries, governments and countries, and the globe as a whole. Microeconomics starts by thinking about how individuals make decisions. Macroeconomics considers aggregate outcomes. The two points of view are essential in understanding most economic phenomena.

What can I do with a degree in Economics?

Economics studies the principles guiding the best use of scarce resources.  Important topics in economics include consumer choice, the distribution of income, economic growth, inflation, and business cycles. Economics majors develop skills that are needed by virtually every type of business firm. Economists work as financial analysts, marketing analysts, management trainees, project managers, and consultants. An economics degree will also prepare you for a variety of positions with federal and state governments, with agencies such as the Federal Reserve, and with research and policy institutes. Law school admissions officers also look favorably on economics majors. Economics majors who plan to teach in colleges or universities will need to go to graduate school first.

Related career titles

Bank manager
Budget analyst
Credit analyst
Economics teacher
Financial analyst
Foreign service officer
Labor relations specialist
Loan officer
Market research analyst
Purchasing manager
Real estate broker
Risk analyst
Securities analyst

 -American Economic Association

 Last Published 4/10/13