Personal economics

I’m a reluctant economics minor. Not a bum student of the economy, but certainly not the kind that will be forever enshrined glowingly in the halls of Wylie.

That being said, there is something that I find very exciting about the “dismal science.”

Admittedly, I’m one of the droves of students who wouldn’t have even dreamt of taking econ if “Freakonomics” hadn’t convinced us that baby names and sumo wrestler matches were the stuff that economic analysis was made of. But even after a year of college economics courses having cured me of my popular economics delusions, I continue to enjoy it.

I still really don’t understand or care that much about money, and whenever numbers show up in lectures I cringe. Even after a semester of cramming my brain with facts about GDP and the Fed, attempting to understand the financial crisis leaves me dizzy and confused.

But fancy acronyms and financial woes aside, there is something elegant about basic economics. At the end of the day microeconomics, at least, attempts to understand why people chose to do the things they do.

The numbers and graphs are, at the heart, attempts to quantify the mystifying ways that people make choices. And to an artsy right-brainer who has no future in investment banking, this is what is most interesting: the fact that economics offers a new way to think about why we behave the way we do.

Exhibit A: Economics is concerned with so-called rational behavior. The paradigm of economics is (beware fancy lingo!) cost-benefit analysis. The basic economic mantra says: “Take no action unless the marginal benefit of that action exceeds the marginal cost.”

In layman’s terms this means you should only do something if the extra good stuff you get from doing it exceeds the extra pile of bad stuff associated with doing it. It’s simple, but life-changing, no?

Just think of the endless amount of applications.

The next time your professor asks you why you didn’t do your homework, just tell him that you performed a cost-benefit analysis and the marginal benefit of going to that concert exceeded the marginal cost of failing the assignment. Who can argue with a rational choice?

Or even better: Say your significant other leaves the apartment a mess and doesn’t pay enough attention to you. All you have to do is sit him or her down and say that no rational consumer would continue to consume under these conditions. Voila! Cost-benefit strikes again.

At the end of the day, what economics captures so beautifully is that life is about difficult choices. It says resources – money, energy, enthusiasm and most importantly time – are scarce, and although there is an infinite amount of wonderful things that we could do with our lives, we must ultimately do some things at the cost of others.

Former UN secretary-general and economics major Kofi Annan said, “To live is to choose.”

He understood the fundamental challenge of economics and of life: to do the best that we can do with the resources we are given.