DAY5 A journey of Yours and Mine! How to apply economics in daily life.

How to apply economics in daily life

Two guys walked into a bar in the USA and approached a lady he saw first and offered her drinks but was taken down by her. No, I’m not distracted by the topic but I’ll make you think about the importance of economics with these real examples. So let’s get back to the story.

After seeing this method, the other guy decided to go to the virtual world and made an account on Cupid.com, the dating app. He applied the same method and sent many requests to the ladies he saw pictures of. The same thing happened here also, ladies stop using Cupid anymore and there are fewer ladies left which makes fewer men there too, and ultimately Cupid’s business was affected drastically.

So whom did they call to solve this problem? Yes, you guessed it right, ECONOMISTS!!

“Murieal Neiderle of Stanford and Dan Ariely of Duke” after doing research they gave solution to limit the no. of offers that men can make per month to the ladies, by which they would have limited offers to make and they would choose wisely whom to talk or not, and they probably started looking at their profiles.

This saved the business of Cupid and its competitors who copied this strategy, this is called artificial strategy, and in this case, ladies were artificial scare in Cupid virtual world.

Economics is so vast that it applies to your day-to-day life and you are an everyday economist. No, I’m not exaggerating things,

Economics seems to be the concept of a commerce student, and yeah that’s not wrong but what if I tell you, even if you don’t know the “E” of economics, still you are the part of economics.

Let me show you how: -

You are going with your friends to just chill and have some street food, and you find out you didn’t have that much cash to have all those, the decision you choose what to eat and what not to, is ECONOMICS.

Economics doesn’t always involve money, mostly it studies the human decision and by which the actions are taken or affected.

Yeah, even if you are in an examination hall and just divide the questions according to their weightage, like what to do early and what to do later, this decision is also ECONOMICS.

You watch AMAZON PRIME or NETFLIX?, say you have a monthly subscription of Netflix of Rs.149 and now you have access to unlimited videos, series on Netflix. This example too contains economics in it.

149 that you pay is your fixed cost because that amount you will pay each month till you want and the unlimited access of videos are an additional cost or marginal cost in terms of economics because it would further consume internet and its usage, and yes there would always be opportunity cost if you choose to watch Netflix or do something productive instead to watching it.

Oh! and an important thing, if you feel that you could do something else of that 149 rupees instead of Netflix but now it cannot be refunded, then we call it “sunk cost” in economics, you see everywhere is economics.

So, stunned right? I was too when I went this deep into some real examples of economics. Economics seems to be more statistical, revolved around economics and many times students find it boring and that’s not their fault because how it is taught is boring, it is just like physics if you don’t include experiments, examples it would be boring.

There is an end no. of examples which shows the importance of economics and its both the branches macro and micro.

Do YOU mostly think what could be the solution to this high petrol price in India? How would you survive at this inflation rate and questions like that, but their answers are simple to find if we just know the basics/apply of economics? Just read about the inflation rate, interest rates, tricks to gain higher interest rates than inflation rates.

There are lots of schemes which could help one in surviving and giving the better returns, which I explained this “Govt schemes that middle class can be benefited from”

Economics always focuses on making the best out of scarce resources, whatever you have in limited access you will use it wisely whether it is money, food, clothes, or request access in Cupid.com.

So you may think why not print enough money so that no one in our Bharat could remain poor, well that’s not the solution to unemployment and poverty. As you know we only use limited resources to the maximum but if we have enough money to fulfill all our desires, soon there would be so much price rise nationwide, which would cause hyperinflation, and again more would come under BPL.

But yes something similar is being tested in South Korea, each citizen would receive a card, in which after every 3 months, 200dollars would be credited by the government and that money could only be spent on the local shops and for the specific products only, this would increase the domestic business and growth and wealth.

MACROECONOMICS

If you go to Switzerland, Japan, Canada you probably have a better standard of living as compared to Zimabave. But why so? Because of their economy

You may not care what GDP is, how it impacts and what’s the economic growth and that’s fine but the result of these impacts your employment, unemployment ratio of nations, job losses, and Covid as shown approx. 12 crores job loss in India only.

So these concepts like Fiscal Policy, Monetary Policy, etc., these all affect the living of an individual. Fiscal Policy would determine how much to be deducted for taxes from your income. Monetary Policy would determine the interest rate that you pay on your home, car, bank loans, etc.

More of this when people think or invest in stocks, real estate, or bonds for higher capital gains and returns, they are applying macroeconomics without knowing, and this practice may increase their debts because they don’t make a proper analysis of the economy but the ones who do make great returns.

These are some learnings that show the importance of economics in day-to-day life and by understanding and applying it wisely anyone can make wonders.