WHY STUDY ECONOMICS?

Studying Economics can be both useful and enjoyable. Consider the following:

• If you work hard and study efficiently in your Economics courses, you will develop valuable skills. Because Economics is a difficult subject (at least for most students), you will need to manage your time and priorities. Economics is quite analytical, meaning that to succeed involves developing solid problem-solving skills. You also need to think critically. Critical thinking is the skill used to evaluate questions like: Should our government promote free trade? What is positive and what is negative about free trade? Thinking critically, solving problems, and managing time and priorities are essential skills that employers look for in college graduates (Source: Michigan State University, “12 Essentials for Success”).

• Economics is relevant. Here’s an example: Suppose that in the future you’re thinking about starting your own business. If you took Economics in college, you would be more likely to make this important decision having considered all of the relevant factors. You would have developed the tools to analyze such questions as: 1.) If you work in the business but do not pay yourself a salary, does that mean your labor is free? 2.) If your business makes a profit, have you done well?

• Economics can be surprising. A lot of ball players make millions of dollars per year. Words like “excessive” and “outrageous” are often used to describe those salaries. What does Economics have to say about it? Well, the owners of those teams have voluntarily agreed to pay those salaries. But why would they do that? What is it that justifies those salaries? Answering those questions involves the use of marginal analysis, which is one of the most important tools in Economics. In fact, marginal analysis is used to get a lot of surprising answers, and is a tool that is broadly applicable both in business and in everyday life!

• Economics can be profitable. Consider the following investment situation: One year ago you purchased a common stock whose price fell 10% over the course of the year. Should you hang onto the stock until you recover your loss? One of the most profitable lessons you can learn in Economics is the concept of a “sunk cost.” To savvy investors (many of whom – no accident – are well trained in Economics), the prior year’s loss is irrelevant to the current investment decision. The relevant question is: Is there another investment out there that is better, and that I should therefore switch to?

So what’s the bottom line? Just this: If you come to class with an open mind, prepared to listen carefully and work diligently, Economics can be a richly rewarding subject.

Department of Economics, College of Arts & Sciences
5307, Friedmann Hall, 1903 West Michigan Avenue
Western Michigan University, Kalamazoo MI 49008
Phone: (269)-387-5535 Fax: (269)-387-5637

Site Contact: Web Administrator Updated:05/01/2005