There's More To Economics Than The Economy: The Economics of Self Improvement

Since 2007, the global economy―and more specifically United States―has been recovering from the most serious financial crisis since the great depression in the 1930’s. During this time, we’ve been consistently reminded by the media, economic analysts, or maybe even through our own personal finances that the economy is to be blamed for the tightening of our overall financial constraints. 

Lord Lionel Robbins, a British Economist and former head of the Economics department at the London School of Economics defined Economics as, “a social science that studies human behavior as a relationship between ends and scare means which have alternative uses.” Economics is a social science because it lies somewhere between the spectrum of hard sciences (like math, chemistry, and physics) and arts (theater, painting/drawing, and music). The heart of Economics subject-matter focuses on how human behavior dictates the decisions we make based on scarce means and unlimited wants―in other words, how we pay for all the stuff that we would like to have as opposed to what we actually need.

Economics can be further divided into different subsets of fields including microeconomics (Individuals and households), macroeconomics (economic aggregates), development economics (developing and developed nations), international economics (global trade and travel), political economics, etc.… All these disciplines recycle the same fundamental theories, concepts, and tools to explain how human behavior affects the growth and development of an entity, be it a private business, government, or the corporate sector. However, in this piece I would like to shed some light on a different dimension of Economics we often do not hear about in the media: I’ll call it Self-Economics.

What I call Self-Economics, borrows economic theories, concepts, and tools from the core subject-matter to explain how to achieve our own personal development goals―to maximizing our inherent resources and promote sustainable personal growth. For each and every one of us who is consistently looking to grow, improve, and challenge the status-quo―on the path of self-development―the fundamental tools and concepts of Economics can come in very handy.

I remember taking my very first Economics class in high school. In one of our class tests, I had really high hopes of scoring an excellent grade. However, to my disappointment, my grade was lower than what I expected. My first reaction was to corner a close friend of mine, one of the brightest in the class, and I asked to see his essay. After doing a quick scan of his A+ paper, I was not impressed. I didn’t think he wrote anything special that I didn’t already know―so why was there this huge gap between our scores.

My friend’s response was one of the single, most eye-opening moments in my educational career. He explained that Economics―same with any other field―has its own language and in order to adequately explain any concept I’ll need to use the right jargons. For example, the profit maximizing, equilibrium, point is where DD = SS (meaning market demand is equal to market supply…). That way, the professor knows that you know the root concepts and you’re not just playing a game of hit-or-miss. From that moment on, whenever I’ve been faced with an Economics question, I’ve always focused on starting by hitting the nail right on the head with the right definitions, equations, and graphs before going further with my own supportive analysis. I took this gold nugget of wisdom and I went on to earn my Bachelors and Masters Degrees in Economics and I’ve truly developed a great sense of respect for the subject and its applicability.

Now there’s one philosophy I fully subscribe to, without a doubt―one does not need to step in within the four walls of a classroom to get an education, or become a person of influence. Look at some of the most influential people in the world: Abraham Lincoln, Thomas Edison, and Eleanor Roosevelt. Non-the-less, one thing we all need is to adopt a lifelong learning lifestyle and seize opportunities to read, practice, and engage with those who have a similar threshold of thirst for learning and personal development as we do.

I also know there’s this distinctive gap between knowing and doing… and I do my best to make sure that whatever lessons I’ve learned in the classroom serve as applicable tools for improvement in my personal life and professional endeavors. I’d like to share with you three main lessons that I’ve learned as a student of economics over the course of the last 15 plus years:

Firstly, For every decision you make, think in term of harnessing all your resources to meet your goals in a way that fully maximizes your resource pool, and minimize costs and waste as much as possible―these resources could be financial (checking, savings, investment accounts), capital (vehicles, laptops, cellphones), people (family, professional networks, Toastmasters International and other leadership/educational clubs), energy (emotional, mental, physical), time, and our greatest resource―and weapon―brain power. A mentor of mine always said, “When you think enough, what you have is enough”. I’ll go one step further and say within the confines of all your resources, there’s nothing that you cannot accomplish.

Secondly, beware of averages―in grad school, my Microeconomics Professor would often say, “If Bill Gates walks in the Room right now, on average, we’re all billionaires…” A major part of economic analysis rests on marginal analysis rather than average analysis. Marginal analysis assesses how the final outcome of our choices can change as we add one additional unit of a resource. In other words, learn to factor into your decision making that we live in a very fluid and dynamic world. Everything is always changing. If you’re complacent you’ll die. Keep up with new information. Learn new things. Understand that nothing lasts forever, appreciate what you have for today, but seek to improve to prepare for tomorrow.

Thirdly, competition is not a bad thing. If you want to grow and improve, surround yourself with the right people. Connect with others who share your passion in any specific field, engage in friendly, healthy competition, and you’ll tend to gain traction in your quest for personal development. Adam Smith, the father of economics wrote the wealth of nations in 1776. His book marked the beginning of modern capitalism (the invisible hand theory) which promoted free trade and development across nations. Understand that no man is an island. In order to stay relevant, to compete and become better versions of ourselves, we need to connect with the right people. Consider acquiring relevant certifications that will bolster your professional growth. Join educational clubs like Toastmasters International to improve your public speaking skills and network with forward moving individuals.

We are all Economists―to some degree, regardless of whether we studied the subject in school or not. As we pursue the path of growth and personal development, let us keep in mind the importance of harnessing all our resources and using them in ways that maximizes our productivity and minimizes waste. Let’s abstain from the average mentality, and do our own marginal analysis, consistently assessing the changing conditions of our environment and drawing from the ever limitless pool of information at our disposal with the right goals in mind―personal development, community involvement, and positively impacting our sphere of influence.

Photo rights:

http://studyingeconomics.ac.uk/how-is-your-economics-degree-preparing-you-for-life/

http://leadenergy.org/2010/09/supply-demand-energy-innovation/