You Can Apply Economics In Your Daily Life- But I Won’t Tell You How!
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. So, 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. Unfortunately, the same thing happened here; ladies stopped using Cupid anymore. 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!!
“Muriel Neiderle of Stanford and Dan Ariely of Duke,” after doing research, gave a solution to limit the number of offers that men can make per month to the ladies, by which they would have limited offers to make. They would choose wisely whom to talk to 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; it primarily studies human decisions and how the actions are taken or affected.
Yeah, even if you are in an examination hall and you 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.
The amount 149 you paid is your fixed cost because that amount is to be paid each month. The unlimited access of videos is a marginal cost in economics because it would further consume the internet and its usage. Yes, there would always be opportunity costs if you watch Netflix or do something productive instead of watching it.
Oh! and an important fact, we call 149 rupees “sunk cost” because you cannot refund it, you see economics everywhere.
So, stunned, right? I was too when I went this deep into some real examples of economics. Economics seems to be more statistical, revolves around economics. But, many times, students find it boring, and that’s not their fault because how it is taught is boring. It is just like physics; it would be boring if you didn’t include experiments and examples.
There is an end no. of examples that show the importance of economics and its macro and micro branches.
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.
Economics always focuses on making the best out of scarce resources; whatever you have in limited access, you will use it wisely, whether 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. Still, 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 three months, 200dollars would be credited by the government, and they could only spend that money on the local shops. 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 living standard than 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. Twelve crores job loss in India only.
So these concepts like Fiscal Policy, Monetary Policy, etc., these all affect the living of an individual. For example, fiscal Policy would determine how much to deduct taxes from your income. Monetary Policy would determine the interest rate 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 do wonders.
