Surely everyone who has ended up on this blog has sometimes read the news, which has the views of economists, i.e. economists, at any given time. They warn of the harmfulness of some phenomenon and comment on the latest economic policy guidelines. They may impersonate themselves or represent their employer – for example, a bank, central bank, or research institute.
The purpose of these stories is to give the reader more ways to understand the world around them and to provide new perspectives on current topics. Nevertheless, they often seem quite difficult to understand. It may seem that the person talking about money and politics on the pages of the magazine is somehow smarter than himself.
I have also sometimes wondered, that I am not as smart as fluent in the language used by expert financial advisers. However, this way of thinking was forgotten when I started studying economics four years ago and realized that difficult-sounding entities are understandable to anyone. They just need to be explained openly.
Simplification is part of economics
I think economics is like trying to outline the bottom of a lake through the water: you see a school of fish, but the details of the bottom are left to conjecture.
In economics, the world is modeled through different graphs and formulas, but since nothing is really simple enough to fit all sides of a phenomenon into a graph drawn using the X and Y axes, simplifications are necessary.
One of the best known and most frequently used simplifications is the term ceteris paribus, which is Latin and could be freely translated as “nothing else changes”. This statement is diligently cultivated in the context of the study of the connection between things, and it is to be pointed out that the results of the study may not be correct if a third thing changes.
That is, in a real-life where everything is always changing, what is claimed may not even work.
I think this is a good example of how simplification can build theories, but at the same time compromise their detail. A swarm of fish is outlined, but it is not possible to see that a swarm of fish was lurking at the bottom of the lake.
Boldly as part of a social debate
My argument that economics can be used to understand the world is undeniably bold. Isn’t the world a pretty wide area to outline? Of course. While simplification can be seen in some ways as a weakness in economics, it is at the same time a strength; namely, it allows you to explore almost anything.
There are endless fields of application in economics and they extend far beyond the economic world. It’s not just about supply and demand, stocks, interest rates, or prices. It can also be a question of gender equality, poverty, structural racism, education, crime, human decision-making, or monitoring the impact of political decisions.
Although originally I ended up reading economics through more chance, I have found interest and passion towards it just its versatility. I think it’s great and Motivational to know something that I can apply in addition to planning my finances in an incredible number of everyday situations: shopping, reading the news, making choices, and even dating.
My own story of starting university and choosing a major may also be a necessary reminder to someone that we economists are just ordinary people: I chose economics because, in my first year of study at the School of Economics, I hated all subjects.
The crucial moment was when, when choosing a major, one of my fellow students stated: choose economics, you hated it the least.
So I became an economist. And today, economics is one of my most significant passions.
This spring, I will write about the most important terms in economics, the differences between monetary and fiscal policy, the effects of interest rates on an individual’s life, and anything else. The core purpose of my blog posts is to help people better understand financial news and participate in social debates more boldly. I believe that each of us deserves to understand what is happening in the world!