Tuesday, September 2, 2008

Social Science

This weekend, my wife and I spent hours with my cousin discussing elements of politics, science, ideology, mathematics, semantics, economics, and a few other long words I don't feel like typing out right now. The conversations were engaging, and perhaps even heated at times, but most of all they were enlightening. I got to hear the perspectives of two intelligent people I respect, and I realized how little the average person respects (let alone likes) economics.

Economics serves as a bedrock of many other social sciences. The interaction of supply and demand curves is used to explain marketing, research and development, finance, and so many other fields. I still love to recall the lectures of my graduate professor who could explain why people want to be underpaid, why companies would pay more to sell a product for less, and other such seemingly ridiculous suppositions. I'm not even going for the truly outlandish ones there, either. Yet when those concepts are explained using economics, they each make a lot of sense. My undergraduate professor had a great way to explain the law of diminishing return of investment - one piece of apple pie may be wonderful, but the fifth piece makes a person never want to see apple pie again. Those two men did wonders to help me appreciate their field, and I have tried (often futilely) to share what I learned with many I have come in contact with.

I know economics does not explain everything in life. I know that not every decision can be explained by economics (though some economics professors may try). I simply value the light economics can shed on many decisions people make in their everyday lives. Dr. Randy Pausch, for instance, explained the reason there were few great doctors in the field of cancer research focused on pancreatic cancer - there was no many to perform the research. Sure, everyone would love to find a cure to that horrible disease, but without the funding it is hard to attract enough people to do it. The medical field in general has a shortage of doctors - especially in fields that do not pay as much as surgery, for instance. Do people not want to be doctors anymore? Sure they do, but with the extreme cost of going through school, along with the time spent not earning a paycheck, it becomes difficult for many people to justify the sacrifice. Reduce the cost, shorten the time commitment, or increase the payout and more people will enter the field. That's what economics demonstrates.

I understand, though. Lock three economists in a room with the assignment to define "value" or even "money" and they'll run out of oxygen before they agree on anything. Economics is not an exact science - it is a social science. It has a lot of room for interpretation. It also has a lot of value for interpreting, though, too. I just wish I knew how to help other people see how.

-- Robert

6 comments:

Suki said...

This post makes sense to me on so many levels. Ever since my professor - who is now a mentor of sorts - mentioned Freud in relation to the "economy of emotions", I've been thinking about a lot of things in terms of economics. "Emotional investment" and related terms are a firm part of my daily vocabulary, and I tend to think of a lot of things in terms of supply, demand, and return from the investment.
Every time I get a strong sense of exactly how ubiquitous Economics is. Even as a literature student(albeit one who considered Economics to be her second choice, whose mother was a statistician-turned-economist and whose father is a professor of Game Theory), it doesn't really take "Death of a Salesman" to make me realize how close and how important Economics are in our lives, and why those who have a basic understanding of it and can apply it are often the happiest.

Oh, and it might interest you to know that my university, unlike the other major universities in Bengal, has Economics under the Arts faculty rather than Science. I find that quite intriguing.
Thanks for spreading the wisdom :)

Robert said...

My undergraduate university offers Economics from the business school as well as from the school of arts and sciences (which means it's probably more of a history course). I took it from the business school myself, but I can definitely see why it could be taught from either perspective.

You touched on something I was explaining to my cousin: if someone really wants to, then can probably quantify almost any decision to be measurable within the discipline of economics. The example I gave was the value of job security to him: it was worth the difference between whatever job he could have and the one he chose for security. Things like the importance of job satisfaction, a need for praise, or other intangible (i.e., non-monetary) compensations can all be quantified based on alternatives and using the concept of economic loss.

Thanks for the comment, Suki. It's always fun to get a different perspective.

le35 said...

I understand some of the main concepts of economics, but in the end, there are too many big words that don't mean anything. Really, economics is better thought of in everyday situations. Somethings while not having a dollar and cents amount added to them, have a monetary value by being worth more to someone than money.

Robert said...

Sounds like you understand economics just fine from your comment, Ellie. Economics seeks to study how markets interact, which generally has something to do with prices, which generally have something to do with someone selling a product or service at a price someone else is willing to pay - which suggests something about the value of that product or service... and so on and so on.

Suki said...

Just checked back to the comment thread, and your reply to Ellie talks about something I've been trying to explain to my folks for a long while. They tell me how much a product would cost to make. I tell them how much it's worth to most people who buy them.

Robert said...

Yes, Suki, like it or not - the value of a good or a service often has far more to do with what people will pay for it than what it costs to make. Similarly, most people feel "underpaid" but by accepting their wages, they assign a value to their work. From the reverse perspective, when people do demand that they make more than the market offers, then they may find themselves unemployed unless they possess a unique skillset that their employer must have to operate. Economics is fascinating.