What is economics?

When you think of economics, what do you think of? The Chancellor, the economy? Well it’s about much more, covering the personal, national and global aspects of our lives.

By: The OpenLearn team (Programme and web teams)

  • Duration 5 mins
  • Updated Wednesday 3rd August 2016
  • Introductory level
  • Posted under Economics, Economics
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London Stock Exchange Copyrighted image Copyright: BBC

Economics is about how, as individuals and groups, we get the things we want to buy and the services we need and want. From a £5 flight to Belfast to a penny off income tax, from a National Health Service that’s free at the point of use to the price of a can of beans – economic models help people understand why things are the way they are and why changes happen.

It’s about how money is made and lost, used and misused. From private funding for new schools and hospitals to the level of house prices in your town, the success of EasyJet to takeover bids for Manchester United – economics has something to say about all of these.

But economics isn’t just about money and it isn’t just about the decisions made by governments or big business. It’s about making choices – choices between different uses of limited resources – and most of the resources we need to use in our lives are limited in some way or another.

From gender discrimination in the workplace to the influence of trade unions on employment and wages, the price of new cars on the forecourt to new ways of tackling pollution – economics touches on almost every aspect of everyday life.

On the larger scale, when the national economy does well, lots of us feel the benefits in terms of more jobs, higher wages and better services. When the national economy is not doing well, unemployment rises, and the quality of public services drops.

Internationally, economics is at the heart of issues like whether we should join the Euro, the impact of globalisation, the price of oil, and what should be done about the third world debt.

But economics is not a subject which gives one single correct answer to every problem! Economists – and political groupings with particular economic views – often disagree totally on the causes of particular problems and on what the best solution will be. New Labour’s solutions to the problem of unemployment are guided by different economic principles to solutions put forward by the Socialist Workers’ Party. George Bush's actions on global warming are guided by very different economic principles to the actions of most other governments in the developed world.

Whether it's a personal issue like an increase in council tax, a national issue like the Euro, or a global issue like exploitation of workers in developing counties, even a basic knowledge of economics helps you to get a better understanding of what’s going on in the world around you.

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