Economics: the study of choice under a constraint

Recently, the furlough scheme ended and fuel caps rose. Changes to stamp duty, VAT on holidays and other support packages provided by the government also ended.

Regardless of your thoughts on how the government handled the crisis, the pandemic has transformed how we think within our businesses, our economies and our societies. This thought process is a mainstay for economics students.

I am told by our teaching team at Brighton that (ignoring any personal impact) this is part of the ‘fun’ for economists – looking into the challenges businesses and countries face and how to fix them. And, because Economics affects every part of our daily lives, and the pandemic has reached almost every country in the world, the team have no end of examples to practically put the subject into context for students.

Isn’t economics only of interest to people in finance?

It’s really not. Economics is essentially a study of choice under a constraint. We have a list of things that we want to do but are limited in how many of these we can do.

Our resources, money, revenues, tax receipts, even time is scarce and we must make choices. This is the same – to varying extents – from the very wealthiest in society to the poorest, from the small business start-up to the multinational and finally to governments. They all have endless lists of things they would like to do but haven’t got all the resources and must choose. Those in economics study those choices.

As a discipline Economics is divided into two main categories: microeconomics, the study of individuals and business decisions e.g. supply and demand; and macroeconomics, the study of countries and governments e.g. how a country’s policies affect its growth.

Macroeconomics

Supply chain issues have recently affected many products and services. Image courtesy of Pexels / Pixabay

In recent months, you’ve probably heard or even experienced issues with deliveries, increased costs of building supplies or even had to miss your daily McDonald’s milkshake fix as the country has faced supply chain issues. There’s still lots of debate as to which factors caused this, with Brexit and Covid-19 being the top picks.

As an advisor to the Prime Minister, macroeconomics would have been used to look at the impact of any Brexit trade and immigration policies and more recently to advise Boris to grant lorry drivers temporary exemptions from the Brexit immigration points system in an attempt to rectify the current distribution issues the UK is facing.

Microeconomics

As an advisor working in a company, you’d be advising your leaders and business on how to prepare to minimise the impact of any incoming changes of policy or from a crisis.

Many business had to change their business model from eat-in to take aways or deliveries during lockdown. Image courtesy of StockSnap / Pixabay

For example, the decision by the Government to go into lockdown restricted access to non-essential shops for consumers, meaning businesses had to find ways to bring their services or products to people’s homes. This ranged from local pubs starting to offer take-away Sunday Roasts and restaurants offering meal boxes and cook at home kits.

This also brought businesses new consumer segments. Supermarkets provided dedicated shopping slots to essential workers and the over 60s, and they heavily increased provision of grocery deliveries. A more recent example is where companies are using hybrid working to reduce operational costs. As they need less desk space companies are not renewing leases of buildings, meaning they are paying less for rent and electricity each month.

What can I do with an economics degree?

If you’re thinking about studying an economics degree, you won’t be short on choice for which industry to work in. There’s strong demand for highly numerate graduates across banks, not-for-profit organisations, consultancies, insurance companies and government departments including defence.

The analytical, communication and problem-solving transferrable skills you’ll learn on an economics degree means you’ll be set for a career in roles in areas such as mergers and acquisitions, audit, market research, actuary, risk management, consultancy, data, financial and operations analysis. Some even go on to become professional economists through the Government Economic Service.