If you are interested in pursuing a career in economics or finance, we probably don’t need to sell you on the idea that learning about economics is important – in your case, it is indispensable.
However, even if you aren’t sure about your college major or know you want to pursue another area of study, learning about economics and finance can be incredibly beneficial.
First things first, for the sticklers out there, let’s clarify that Economics and Finance are not synonymous. However, we will use them relatively interchangeably for brevity’s sake throughout the blog.
Economics: Economics is the overall study of the ‘production, distribution, and consumption of goods and services, or the material welfare of humankind.‘
Finance: Finance is a part of economics, but focuses on wealth accumulation and best practice for management of those funds. It can focus on Public or Private finance.
A strong understanding of economics and finance can directly benefit you in many ways – some of those are quite obvious. For example, Personal Finance can help you make better financial decisions. Understanding compound interest and amortization, for example, can help you make a more informed decision when buying a car or house.
But what about some of the more indirect benefits of having a baseline understanding of economics? Could this be helpful if you decide to pursue another career or college major down the road? We think it can absolutely be beneficial given how ubiquitous economics is in our society. Below are just a few applications to give an example of how pervasive economics is and how much additional insight can be gained from spending the time to master, or at least become familiar with, the discipline. As you go through these, no doubt you will be able to come up with so many more fields of study or applications for your own life.
1. Economics & Finance in Politics
We will do our best to tread lightly here, but this certainly merits inclusion on our list. Having a solid foundation of economics can help illuminate many of the issues debated throughout our country and the world. For example, think about all of the political conversations you have heard about taxes, trade, GDP, and the minimum wage – and that is just scratching the surface. Economic knowledge will ensure you can keep up and follow along in the political arena.
This could be especially important if you think you would like to pursue public office or a political career at some point in your life. From the mayor of a small town to a United Nations Representative, a disproportionate amount of your daily tasks, responsibilities and discussions will be directly about economics or a topic informed by some level of economic involvement.
2. Economics & Finance in Decision Making
Putting aside the obvious benefit to financial decisions, studying economics can help you develop overall better decision making skills. Economics provides so many great case-studies for rationality of decision making. It can help you quantify and thoroughly analyze a situation to help you choose between alternatives. A great example would be studying cost-benefit analysis or risk assessments. These can be applied to almost any area of your life; for example, choosing a college.
Let’s say you have it down to two main contenders and you have been accepted to both. What are the costs and benefits of each school? Not just financial costs, but any detraction vs. benefits. Maybe one is further away from friends and family – that might be a cost. But maybe it has better rankings and placements in your major of choice – that would be a benefit.
The type of analysis used in economics can help you think more analytically about your life-decisions, even seeming mundane ones, and help you make better choices.
3. Economics & Finance in History
Fighting the urge to say ‘all,’ we can at least safely say many of the history’s most dramatic and important events had at least a partially economic impetus or input. And not just those directly connected to the economy, like the Dutch Tulip Crisis.
- The Cold War – throughout the Cold war between the USSR and USA, finances played a lead role. One of the strategies that is often credited with helping end the Cold War was the arms race and space race. This was the USA calculating that in order for Russia to keep up and match weaponry (especially nuclear weapons) and space capabilities, they would essentially need to spend more money than they could afford. There are alternative theories on what led to the end of the cold war, but it is not up for debate that the economies of the world superpowers, capitalist and communist respectively, played a huge role in the overall conflict.
- The Panama Canal – while President Roosevelt surely wanted control of the Panama Canal partially for national security reasons, so military ships didn’t need to go all the way around Cape Horn, there was certainly an economic benefit as well. Businesses wanted a cheaper and quicker way to ship goods between the Atlantic and Pacific oceans and the Panama Canal provided a much better alternative than going around the tip of South America.
- The Anglo-Dutch Wars – Okay, so not a war we think about too much anymore. However, this series of wars in the 17th and 18th century has some fascinating lessons on how economic issues can lead to war if not handled properly. The wars were mostly fought over the trade routes for certain goods and over economic superiority of the high seas.
"Economics is everywhere, and understanding economics can help you make better decisions and lead a happier life." Tyler Cowen
Economics & Finance Summer Courses for High School Students:
JKCP Enrichment offers high school students a chance to try different things and create their own summer program schedule. They can choose one morning class and one afternoon class from across over 30 different subjects.
This course familiarizes you with business documents such as income statements, profit and loss accounts, budgets, forecasts and cash flow models for you to make more informed decisions. Learn More >
Gain knowledge of the dangers and pitfalls that have occurred to the market in the past and become an investment pro by building an expansive set of trading strategies and the tools to track your own portfolio. Learn More >
In this one-week in depth business class you will learn the skills needed to develop a product, build a business framework, determine and meet market needs, and culminate in a pitch competition for investors. Learn More >