Economics: The study of human behaviour

Economics may appear to be the study of complicated tables and charts, which show boring statistics and trends, but that is not economics. Economics is really just the study of what constitutes rational human behaviour in the endeavour to fulfil needs and wants. And there is a difference between the two, you need to eat proper meals regular for good health, but you want ice cream for dessert.

You as an individual have decisions to make everyday. You face the problem of having limited resources with which to fulfill your wants and needs. The same is true for the politicians running a country, they may want to give everyone a housing allowance, but they must find the money to pay for it first.

As a result, everyone must make certain choices with regard to how to spend their money. You’ll probably spend part of your money on rent, electricity and food. Then you might use the rest to go to the movies and/or buy a new pair of jeans. Economists are interested in the choices you make, and inquire into why, for instance, you might choose to spend your money on a new DVD player instead of replacing your old TV.

They would want to know whether you would still buy a carton of cigarettes if prices increased by $2 a pack. The underlying essence of economics is trying to understand how both individuals and nations behave in response to certain material constraints.

Economics is the study of the spending habits of society. Adam Smith (1723 - 1790), known as the “father of modern economics” and author of the famous book “An Inquiry into the Nature and Causes of the Wealth of Nations,” spawned the discipline of economics by trying to understand why some nations prospered while others lagged behind in poverty. Others after him also explored how a nation’s allocation of resources affects its wealth.

To study these things, economics makes the assumption that human beings will aim to fulfil their self-interests. It also assumes that individuals are rational in their efforts to fulfill their unlimited wants and needs. Economics, therefore, is a social science, which examines people behaving according to their self-interests.