All About EconomicsWhat is Economics?Economics, being a social science, uses empirical evidence and scientificmethods to study people and the choices they make. In particular, it studieshow agents (such as businesses and consumers) make strategic decisionsand respond to incentives. It analyzes how individuals or societies canefficiently allocate their resources, such as time, money, personal health,human capital, food or the earth itself, in order to achieve a higher standardof living. When many people think of economics, they think of money,finance or business; however, this is not exactly what is studied. The toolslearned in economics can help individuals spend money more efficiently ormake sensible business decisions, but this is only one of many applicationsof the discipline. Economics provides the insights and analytical frameworkrequired to understand the way our world operates, from the choices wemake in our everyday lives to how businesses or governments achieve theirdesired objectives.

Everyday, people make choices that affect their lives, in big or small ways.When making a decision, people tend to choose the option that makes thebest use of their resources in order to achieve the best possible outcome.That is what economics is all about. You are employing economics whenyou ask questions such as:

We use economics in our every day lives.

Why Study Economics?Understanding economics will make you a better thinker and problemsolver. The concepts learned will help explain your own behaviours when itcomes to allocating your time, money and other resources, and will help youmake intelligent and rational decisions. Without a good understanding ofeconomics, people may unintentionally make irrational decisions. Forexample, people tend to buy things when they go on sale, even if theywouldn’t normally buy that item, even at the sale price. Economics helpscorrect these fallacies by teaching sound decision making. Additionally, itwill allow you to better understand the world around you, including howbusinesses and governments operate.

There are many paths you can take with aneconomics degree, and the large selection ofeconomics courses and degree options offered byUVic allow you to cater your degree toward yourinterests. For starters, there is a Bachelor of

Get the right degree for you.

There are many fields within the broad discipline of economics, includinglabour, health and urban economics, economic history, economics and thelaw, monetary and financial economics, economic development,international trade, and environmental and natural resource economics, toname a few. The subject can also be applied to situations such as crime,

There are two main types of economics.Economics can be separated into two broad areas: microeconomics andmacroeconomics. Microeconomics is the study of individual consumer andproducer behaviour. Specifically, it analyzes how consumers allocate theirincomes toward an abundance of goods, and how factors such as priceaffect their decisions. It studies how firms choose the optimal level ofoutput to supply in order to maximize profits, and how consumer demandimpacts production decisions. On the other hand, macroeconomics is thestudy of the economy as a whole, on a national or global level. It

• Should I do homework tonight or watch a movie?• Should I make coffee at home or buy it at a coffee shop?• Should I go to university right after high school or get a

job?• Should I drive to work or take the bus?

Every decision made utilizes economic methods by analyzing the costs andbenefits of each option (or pros and cons). A rational person will choose theoption that yields the highest net benefit for themselves. Clearly, economicsis everywhere; it helps us make logical decisions and achieve outcomes thatmake us, as individuals or a society, better off.

There are many ways to apply economics.

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increase or decrease the interest rate, based on how the economy isperforming. In studying the economics of crime, one may learn how peoplerespond to negative incentives created by the criminal justice system, andhow criminals (maybe surprisingly) behave rationally. As evident, there aremany areas in which economic analysis can be applied. You may considerstudying economics to better understand how businesses, governments, andindividuals make decisions pertaining to this variety of topics.

analyzes factors such as interest rates, inflation levels,aggregate income, and government policies. It alsolooks at international factors, such as exchange ratesand foreign trade. The tools learned in micro andmacro can be further applied in many ways to helpexplain human behaviour and answer importantquestions.

In a world of scarce resources, we can’t have everything we want. Economics

helps us efficiently allocate our resources so we can be as well-off as possible.

war, family, religion and much more. Some of thesepathways employ mathematics and statistics (oreconometrics) in order to find optimal solutions ordetermine relationships between variables. Forexample, labour economists may use calculus todetermine the best combination of labour and

leisure for an individual, based on their preferences and the wage rate. Ahealth economist may use statistical models to determine the causal effect ofeducation on health in order to determine how obtaining more schooling canbenefit your health. Some of these fields are commonly used to helpthe government make policies. For example,environmental economists can determine the correcttax to charge pollution-emitting corporations. The goalof this type of policy is to reduce the negativeexternality (pollution) created by the corporation,thereby making society (as a whole) better off. Asanother example, monetary economists can determine the best time to

Science (BSc) and a Bachelor of Arts (BA) degree option. The BSc degreeis best for someone who is considering graduate school in economics orrelated fields, since it contains more calculus and statistics courses. The BAmajor is best if one wishes to supplement their studies with a higher numberof electives in economics and other disciplines, and if they are consideringfurther studies in other areas, such as law. For both BSc and BA majors, anHonours degree is offered, where students undergo a year-long seminarcourse in their fourth year to complete a supervised research project of theirchoosing. Both Honours degrees are ideal preparation for graduate studies.Finally, a financial mathematics and economics BSc degree is offered,which is a great option for those adept in mathematics and interested inprogramming. An economics degree is a valuable asset that can earn you acareer in many different fields.

Alyssa Russell, BSc Economics (Hons) StudentDepartment of Economics

University of Victoria