importance of Economics

Meaning of Economics and Its Importance

Last Updated on March 3, 2022 by InfomediaNG

One of the most universal languages is economics. It may be expressed in different languages and dialects, it still boils down to the science of wealth, distribution of goods, services and the management of the available resources.

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Speakers of Mandarin, Russian, Hausa, English, French, Portuguese, Yoruba, and Ibo all apply economic principles in their day to day activities. Even our forefathers who could not read and write applied economic concepts to effectively manage their families and businesses.

So, why is economics so important to mankind?

For a better understanding of how this works, this article covers other sub-topics like:

Definition of Economics

Wants In relation to economics

Example of man’s insatiable wants

Reasons for its study

Definition Of Economics

After the publication of Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations in 1776, people have defined economics in several ways. Some of them are:

To some people, economics is the study of scarcity. Man will have to manage the available resources within their reach or choose between the competing alternatives.

It is the study of wealth for human satisfaction. That’s how money comes in and out.

It is the study of the economic activities of man

Economics is the act of creating wealth and the management of such wealth in the long term

Lord Robins Definition

With all the meanings of economics above, economists have also articulated several highly academic definition that encompasses the concept.

One of such is by Professor Lord Robins when it says:

“Economics is a science of that studies human behaviour as a relationship between ends and scarce means which have alternative uses.”

Economics: A senior secondary course by Awa Udu and G.A. Adu

Alfred Marshall’s Definition:

Alfred Marshall in his book ‘Principles of Economics published in 1890 defines economics as :

“a study of men as they live and move and think in the ordinary business of life.”

Economicsdiscussion.net

His definition focuses on the study of wealth in one hand and the study of is a study of man in the other hand.

Wants In Relation To Economics

A former Economics examiner with the West African Examination Council (WAEC) and a former teacher at Banjolat Friendship Academy, Ipetu-Ijesa, Osun State, Nigeria, Mr Boboye says, “our wants are insatiable”. That is, our wants are many relative to the available resources to satisfy them.

Example of man’s insatiable wants

Mr Bright (not real name) wants to buy ice cream for NGN1,500, a wristwatch for NGN15,000, a laptop bag for NGN12,600, and finally a rechargeable battery for NGN14,100? And he has just $50, equivalent to NGN29,000 in Nigeria

So, would he go about all his wants?

He must choose to get the best out of the scarce resources to the above wants. He must use his scarce resources in various different ways. This example will bring us to another interesting economic terminology, “scale of preference” in another article

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10 Reasons For Studying Economics

Why is the study of economics so important to mankind and country around the World. Why do poorly managed countries run into debt e.g Nigeria? Why do companies fold up because of poor management?

This brings us to the importance of studying economics in all facets of mankind whether as a small business owner or a large scale business manager.

1) It enables us to apply its principles to solve practical economic problems.

2) Economics enables us to avoid costly economic mistakes that could threaten the existence of a business or country’s economic sovereignty

3) It enables us to critically think on how to maximise what is readily available within our reach

4) The application of economic terms enables human beings to build a better sustainable relationship in a win-win situation. When a relationship is parasitic, one party loses while the other gain, that’s bad.

5) It enables man and nation to create wealth

6) It enables human and country to manage their resources. For instance, a country that is blessed with abundant crude oil and other natural resources may run into a generational debt and plunge its people into poverty if it failed to properly manage what it has.

For instance, Venezuela’s currency is among the worthless currencies in South America today because of the failure of its leaders to manage its resources.

The same can be said of the Nigerian Naira which is among the weakest currencies in Africa, not because it doesn’t have enough resources that could have gone round

But because since its Independence, its leaders have gluttonously mismanaged the available resources.

7) The study of economics also enables the governed to better appraise the economic policies of the government and how such policies affect their standard of living.

8) Society will always be faced with the problem of scarcity, the study of economics assist us to make a better choice within the available resources.

9) It enables us to weigh the consequences of the economic policy of government even before implementation.

10) Above all, the application of economic principles helps us to make the right choice when budgeting and spending.

Recap:

Human beings, nations, organisations, and homes cannot do without applying the principle of economics in their daily activities.

For instance, a country before the beginning of a new year outlines its expected expenditure for the incoming year which is called budgeting. That’s a typical example of a basic economic concept.

Most times you see a woman making a list of what she wants to purchase at the mall or market. She does this so that she doesn’t exceed what she has. Her “pocket” determines what she buys at the market. If you like call it home management.

Simply put, economics is an act of managing “economising” what you have at hand.

Sources:

  1. Featured Image by Pixabay
  2. Deepali Pal. “Top 4 Definitions of Economics”. Economics Discussion. Retrieved March 2, 2022
  3. Ewa Udu and G.A. Agu (1999). “New System Economics, A Senior Secondary Course”. Africana-FEP Publishers Limited, Onitsha, Nigeria
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