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Economics Essay Topics: 162 Practical Ideas & Useful Tips

economics assignment examples

Essay writing is an inherent part of the economics studying process. Nevertheless, it is quite a challenging task. Are you a high school or college student who is struggling with an economic essay topic choice? Or maybe you are unsure about your writing skills?

We know how to help you .

The following article will guide you in choosing the best topic for your essay on economics. Here, you can find a variety of ideas for high school or college. The economic essay topics are divided into several categories that will help you with your research. And a pleasant bonus from our team! We have created a great guide on how to write an economics essay.

So, don’t miss your chance to write an outstanding economic paper! Check out our essay ideas, read our tips carefully, and be ready to receive your grade A!

  • ⭐ Best Economic Topics
  • 🤝 Socio-Economic
  • 🗺️ International Economics
  • 🛠️ Labor Economics
  • 🌆 Urban Economics
  • ⚽ Sports Economics
  • 💉 Health Economics
  • 💼 Business Economics
  • 🏤 Globalization
  • 🧮 Economic History
  • 💫 How to Write?

⭐ 15 Best Economic Essay Topics

  • 2008 Economic Crisis.
  • Socio-economic policy.
  • Economic systems – Singapore.
  • Racial pay gap.
  • Economic globalization.
  • History of online trading.
  • Child labor policies.
  • The Economic Naturalist.
  • Foundations of economic theory.
  • Impact of unemployment.
  • Universal Basic Income.
  • The role of consumerism.
  • Healthcare economics – Canada’s Medicare.
  • Reasons for recession.
  • Cryptocurrency & environmental issues.

✨ Excellent Economic Essay Topics

Has economics always been a subject of meticulous research? The question is quite controversial, right? There is no specific time when economics started its rapid progress. Generally, economics remains the topic of interest since the establishment of capitalism in the Western world.

Nowadays, the economy is the main engine that moves our world forward. The way we do business determines the geopolitical situation in the world. Moreover, it influences many other parts of our lives.

The skills developed through studying economics are incredibly versatile.

Economics studying is of utmost importance nowadays. It helps to gain a better understanding of processes that put everything in motion.

Economics is quite broad, so it has a great variety of subfields. And this is a fantastic opportunity for us to generate as many essay ideas as possible. Here, you will find great economic topics for your paper. As mentioned before, we have divided them into several sections to ease your selection process. There’s a wide selection of free college essays samples on economics in our database, too. So be sure to check that out.

🤝 Socio-Economic Essay Topics

  • The economic impact of racial segregation in America in the 1950s.
  • Designing a just socio-economic system.
  • Socio-economic status of Hong Kong in modern-day China. Explain how the city of Hong Kong gained a special status in China. Why did it emerge as one of the most important cities in its economy? Comment on the significance of Hong Kong in the international economic arena.
  • Economic growth in the United States in the post-World War 2 period.
  • Mobile banking in Saudi Arabia: towards understanding the factors that affect the sector.
  • The importance of Dior’s bar suit to the women’s fashion industry.
  • Economic problems in the 1980’s Soviet Union. Talk about the significant problems with the economy the USSR had in the 1980s. What role did they play in its collapse?
  • What socio-economic problems did segregation in South Africa cause?
  • History of economic development in the UAE. Discuss the economic miracle in the UAE and Dubai. Explain how the government could turn the city of Dubai into one of the most famous tourist destinations. What strategies were applied?
  • Gender inequality and socio-economic development .
  • The problem of poverty in Venezuela.
  • How the socio-economic and political position of women changed between 1880 and 1940.
  • The economic impact of COVID-19 on global trade.

World trade is expected to fall due to the Coronavirus pandemic.

  • How do the three main economic groups interact with each other? There are three critical economic groups: – Consumers – Producers – Government Analyze the interaction of these groups with each other.
  • Extended essay: how the study of economic data helped our society to advance?
  • Western industrialization socio-economic impacts.
  • Inequality at the top: not all billionaires have the same powers. Analyze billionaires’ net worth, liquidity, political power, and wealth security. Explain why they have unequal social status. What factors determine the influence of billionaires?
  • An analysis of systems that help us measure agricultural development in a country.
  • Is social media a useful tool for brand promotion?
  • The phenomenon of dualism in economic development.

🗺️ International Economics Essay Topics

  • Globalization and its impact on international economic relations. Define the term globalization. What role does globalization play in international economic relations? Provide specific examples of globalization’s impact on the global political economy.
  • The lack of justice for the cheap international labor market. Discuss the issue of cheap labor in various countries. Why do some workers often lack fundamental human rights while others abuse moral norms? Analyze the causes and effects of inequality in the workplace.
  • Japan macroeconomics: problems and possible solutions.
  • The issue of mercantilism in the history of Great Britain. Analyze the rise and development of mercantilism in the history of Great Britain. To solidify your ideas, provide persuasive arguments, and appropriate examples of mercantilism.
  • Why does the problem of environmental protection remain unresolved among global economies?
  • Nissan Motor company’s international business.
  • International environmental concerns in economics: the case of China .
  • The issue of international criminal justice in industry. Explain why international businesses often avoid criminal justice after wrongdoings. Select one case of unethical behavior of a company’s CEO or regular employee. Briefly introduce the problem. What were the causes and effects? How was the issue resolved? Express your own opinion regarding the lack of criminal justice in business.
  • The economy of Singapore and its role in international trade.
  • International microeconomics trade dispute case study: US-China dispute on the exportation of raw materials.
  • The phenomenon of the “gig economy” and its impact on the global economy.
  • The effect of population growth in the international economy.
  • International economics in the context of globalization.

Technological and political changes have chipped away at the barriers separating nations.

  • How does Brexit affect the economy of the European Union? Analyze the immediate impact of Brexit on the EU’s economy. Predict future advantages and disadvantages of Brexit for both: Great Britain and the EU.
  • South Africa: international agribusiness, trade, and financing.
  • Historical essay: the economy of the Dutch East India company.
  • The issue of Mozambique’s economy and possible solutions. Investigate the issue of extreme poverty in Mozambique. What are some possible solutions to the problem of poverty? Base your suggestions on the country’s cultural, historical, and geographical aspects.
  • Imbalances in the global economy. Discuss the imbalances between trading countries on the scale of the global economy. What solutions would you suggest to deal with this issue?
  • How will global economies adapt to China’s growing power?
  • Etihad Airways company managerial economics.

🛠️ Labor Economics Essay Topics

  • Ford Motor company’s labor economics.
  • Labor economics: child labor.
  • The UPS firm perspective: the labor market.
  • Gender inequality of wage rate in modern business. Research how and why gender inequality is still an issue in the modern world of economics. What are some ways to deal with the problem? Present your ideas accurately and effectively. Provide solid arguments and appropriate examples to prove your position.
  • What are the best ways to increase labor productivity in business?
  • Labor unions adverse effects on economics.
  • The decrease of the labor force in modern industries. Talk about the rising rates of robotization in the majority of industries. How will it affect the traditional labor force? Comment on the problem of unemployment caused by labor automatization.
  • Violations of labor rights of workers.
  • Modern labor essay: how can an entrepreneur guarantee the minimum wage to their workers?
  • How can labor geography help develop a special economic zone? Talk about labor geography and its effects on developing an exclusive economic zone. How does the geopolitical location of a particular country influence its level of economic development?
  • Entrepreneurship in the organic cosmetics sphere.
  • Gender-oriented labor trade unions. A case study. Discuss the gender-oriented trade unions and analyze their impact on our society.
  • Child labor in the Turkish cotton industry.

The Syrian refugee crisis increased the risks of child labor in Turkey.

  • The connection between economic growth and demography. Analyze the connection between economic growth and its demographic context. Investigate both sides: – The issue of overpopulation – The problem of low birth rate. From an economic perspective, what problem is more dangerous?
  • The issue of sex discrimination in the workplace.
  • The effects of Landrum-Griffin Labor Act. Explore the labor Act of Landrum-Griffin that was passed in the US Congress in 1959. Discuss its implications and consequences. Discuss its implications and consequences.

🌆 Urban Economics Essay Topics

  • Cities and their role in aggregate economics.
  • Urbanization in Hong Kong and its effects on citizens.
  • The urban planning of the city of New York: a critical analysis. Analyze the urban history of NY. How has the city been developing? Discuss revolutionary solutions to the past and problems of modern times.
  • The impact of a city’s design on the local traffic.
  • Dubai’s spatial planning: creative solutions for building a city in the desert.
  • Globalization, urban political economy, and economic restructuring.
  • How do urban areas affect local wildlife? Comment on how modern production technologies in urban areas impact the natural diversity of wildlife. What impact does the rapid economic progress have on the environment? Suggest possible solutions.
  • Urban sociology: does the city make us better people?
  • Why should people be more careful about investing in real estate? Discuss the issues of overinvestment into real estate. Consider the economic crisis of 2008 as an example.
  • How can regional authorities help improve a city?
  • Urban life and its effects on education.
  • The economic development of a city’s metropolitan area: challenges and solutions.
  • Main factors for the emergence of cities in the Middle Ages.
  • The ethics of relocation: is it justified? Talk about the case of relocating locals when building projects of great magnitude. To what extent can it be justified? Mention its economic and ethical side.
  • The difficulties behind the construction of “green” buildings. Discuss the relatively new phenomenon of environmentally friendly buildings. Analyze both sides: the pros and cons. What obstacles lie behind the “green” building? What opportunities do the “green” buildings offer? Elaborate on your ideas by providing clear arguments or counterarguments.
  • What factors play a critical role in the success of retail productivity in cities?

⚽ Sports Economics Essay Topics

  • Do teams with higher budgets perform better on the field?
  • Corruption in European football leagues: a critical analysis. Investigate the corruption issue in the European football leagues. State reasons and solutions for the problem.
  • The managerial catastrophe of Arsenal F.C.

Discuss the football club of Arsenal.

  • The NextG sports company’s communication planning.
  • Roger D. Blair’s Sports Economics literary review. Write a literary analysis of Sports Economics by Roger D. Blair. Discuss his opinion on the economy of sports. Do you agree or disagree with his position? Provide compelling supportive arguments or strong counterarguments.
  • How significant is the impact factor of a local team on a city’s economy?
  • Kinsmen Sports Centre: marketing metrics innovation.
  • What role does statistical data play in sports? Analyze the part of economic statistical data in different sports organizations. How can statistics help to develop an effective financing plan? Comment on the impact of financing on the performance of a sports club.
  • Sports and energy drinks marketing analysis.
  • Is there a connection between the lack of money and any contemporary issues in a sports team?
  • Performance-enhancing drugs in sports.
  • The business of FIFA: a financial analysis. Investigate the finances of FIFA. What economic factors make them so influential in the modern world of football?
  • The global sports retail industry.
  • The Olympics: logistics and economy. Discuss the logistics behind the Olympics Games event. How the Olympic Games impact the economy of the host country?

💉 Health Economics Essay Topics

  • Is bioprinting the new future of medicine? Analyze the new market of organ printing and discuss its challenges. Investigate bioprinting from an economic perspective. Will the outputs cover the inputs? How will bioprinting impact the financial aspect of the health care sector?
  • Cost-effectiveness of pharmaceutical products in the United States. Comment on the immense cost-effectiveness of pharmaceuticals. What do you think is the price of pharmaceutical products reasonable? Is it ethical to set extremely high prices on the medicals?
  • An economic evaluation of the antibiotics market.
  • Health economics-SIC and NAICS.
  • The financial side of cancer treatment: is it too expensive? Analyze the market for cancer treatment programs in various countries. Explore its costs and complications. What are some possible ways to reduce the price of cancer treatment and make it more affordable?
  • The issue of fast food consumption: a multibillion-dollar market . Fast food has always been one of the notable causes of obesity, diabetes, and other illnesses. Investigate the economic aspect of the issue. Are high profits from fast food production worth peoples’ health conditions?
  • History and evolution of healthcare economics.

Health has become a dominant economic and political issue over the past years.

  • The financial management of a hospital: a case study.
  • The issue of public healthcare in the USA. Write about the long-standing issue of medical sector operation in the USA. Analyze its history, financial, and social aspects.
  • Demand in healthcare economics.
  • What are the economic outcomes of a global pandemic? Taking the COVID-19 outbreak as an example, conduct research on the effects of a pandemic on the economy. How does it affect local economies? What impact does the quarantine have on the international economy? Provide appropriate examples to support your ideas.

💼 Business Economics Essay Topics

  • When does an advertising campaign become unnecessary?
  • Sustainable development of a nation’s economic stability. Discuss how a country can create a sustainable economy. Provide bright examples to solidify your position.
  • How can a small business compete with monopolies?
  • What are the limitations of the Lewis Model?
  • The phenomenon of inflation: inevitable liability or a land of opportunity for our economies? Explore the process of inflation in modern economies. Does it only have adverse effects on the countries’ economies? Are there any advantages of inflation? Analyze it from a positive perspective.
  • Economics, business, and sugar in the UK.
  • The shadow economy of the finance sector. Dive into the backstage of the finance sector and research various “grey” areas where business can be done.
  • Chinese and Japanese business systems comparison.
  • Oil demand and its changes in the XXI century: a critical analysis. Analyze the oil sector and write about its fluctuation in the XXI century. How did the changes in oil demand affect the global economy?
  • The social and economic impact of mass emigration.

🌠 40 More Good Economic Essay Topics

Scrolled through our ideas, but can’t find a suitable topic for yourself? No worries! We have more issues to share with you.

So, don’t stress out. Take a look at our list of economical essay topics. Here are 40 more ideas focusing on globalization and the history of economics.

🏤 Economic Globalization Essay Topics

  • The impact of globalization on the tourist industry in the Caribbean . Analyze both: the positive and negative effects of globalization on the Caribbean. To make your paper well-structured, explore two advantages and two disadvantages. Don’t forget to improve your essay with strong evidence and appropriate examples!
  • Toyota Motor Corporation: impacts of globalization.
  • What are the effects of globalization on developing countries? To what extent do developing countries profit from globalization? Research the subject by comparing various examples.
  • Defining globalization and its effects on current trade.
  • Economic growth as a result of globalization: proper financial strategies. How can a country successfully achieve prosperity with globalization? Discuss proper economic strategies.
  • The socio-political significance of the IT industry’s globalization.
  • Human trafficking in developing nations as a result of globalization.

Modern-day trafficking of humans has become more rewarding for traffickers due to globalization.

  • Globalization and criminal justice policy.
  • What are the advantages and disadvantages of globalization?
  • Globalization challenges and countermeasures.
  • The effect of globalization on worldwide trade and employment rates.
  • Economic integration within the European Union: a critical analysis. Talk about the history of economic integration within the EU. What are the negative and positive outcomes of economic integration?
  • Globalization and food in Japan.
  • Does globalization bring negative effects to cultural heritage and identity?
  • The Industrial Revolution as the first step towards globalization. Focus on the Industrial Revolution in Europe. Discuss its precursors and consequences. Why is the revolution considered to be a starting point of globalization? Provide specific examples of globalization processes that occurred in the economic sector after the Industrial revolution.
  • Globalization 2.0 an analysis of a book by David Rieff.
  • Globalization effects on fundamentalism growth.
  • Does direct investment by foreign businesses come with strings attached? Dive into the shady area of globalization and discuss how to direct foreign investment can bring problems of geopolitical scale.
  • Effects of globalization on sexuality.
  • Alibaba’s globalization strategy: an economic analysis.

🧮 Economic History Essay Topics

  • The rapid economic growth of Europe during the Age of Discovery. Analyze the factors that brought economic growth to Europe during the Age of Discovery. What factors contributed to the dynamic economic progress of that time?
  • Brazil’s economic history.
  • History of capitalism: from the Renaissance to the United States of America. Discuss the origins of capitalism and its centuries-long path towards XXth century America. How the establishment of capitalism impacted the economy of the USA?
  • Max Weber: economic history, the theory of bureaucracy, and politics as a vocation.
  • 2008 Economic Crisis: origins and fallout. Talk about the 2008 Financial Crisis. Discuss its causes and outcomes. What should have been done differently to avoid the global crisis? Comment on the economic strategies countries used to recover from it.
  • The economic marvel of Communist China: from rags to riches.
  • What made world economic growth of the Renaissance possible?

Renaissance Europe had a very diverse economy.

  • The economic history of Canada: how did the settlers facilitate economic growth?
  • What did the major powers of the XIXth century base their economies on?
  • The Rothschilds: political and financial role in the Industrial Revolution. Research the dynasty of Rothschilds and how they came to power. What was their role in Europe’s Industrial Revolution?
  • The link between the “oil curse” and the economic history of Latin America.
  • Roman Empire’s monetary policy: a socio-economic analysis.
  • How did the demand for different goods change their value in the 2000s years? Analyze the demand for goods in the 2000s years and their change in value. Why do these fluctuations in demand for products and services occur?
  • The history of economic thought.
  • Soviet Union’s economic timeline: from the new Economic Policy to Reformation. Discuss the economic issues of the Soviet Union from the historical perspective. Why did the Soviet Union collapse? What improvements in the financial sector should have been done?
  • History of France economics over the past 20 years.
  • The history of economic analysis.
  • The concept of serfdom and slavery as the main economic engine of the past. Dive into the idea of feudalism and serfdom. Discuss its social and economic aspects.
  • The World Bank’s structure, history, activities.
  • The history of Islamic banking: concepts and ideas.

💫 How to Write an Economics Essay?

Generally, essay writing on economics has the same structure as any other essay. However, there are some distinctive features of economic papers. Thus, it is essential to figure them out from the very beginning of your work.

You might be wondering what those aspects of the economic paper are. Well, we have an answer.

An economic essay usually relies on the common essay structure.

Below, you will find a detailed plan that explains the fundamental concepts of the essay writing process. So, don’t hesitate to use our tips! They are indeed helpful.

Pick a topic and dissect it. Picking the right topic is the very basis of writing a successful essay. Think of something that you will be interested in and make sure you understand the issue clearly. Also, don’t forget to check our ultimate economics essay topics and samples list!

Research it. After selecting the right idea from our economical essay topics, research your subject thoroughly. Try to find every fascinating and intriguing detail about it. Remember that you can always ask your fellow students, friends, or a teacher for help.

Come up with a thesis statement. A thesis statement is an essential element of your essay. It will determine your focus and guide the readers throughout your paper. Make your thesis secure and try to catch the reader’s attention using context and word choice.

Outline your essay. Never underestimate the power of a well-structured outline! Creating an essay outline can significantly help you to determine your general plan. Evaluate which economic framework you will be using to address the issue. State the main points of your thesis and antithesis. Make sure that they answer the central question of your work.

Write your introduction. First and foremost, a practical introduction should capture the readers’ attention and state the essay’s key topic. So, put enough effort to develop an outstanding introduction. It will create the first impression of your paper.

Moreover, an introduction should include a thesis statement. As we have mentioned above, a thesis plays a crucial role. Thus, make sure it is clearly stated.

Another significant feature of the introduction is its coherence with the body of your essay. Consequently, the introductory paragraph’s last statement has to present the subject of the next section, generically. Also, keep in mind that no more than three key points can be discussed in a paper, even if it is an extended essay.

Thoroughly work on the body paragraphs. Usually, the body of the essay contains several paragraphs. The number of these paragraphs will depend on the nature of your question. Be sure to create one section for every critical point that you make. This will make your paper properly-structured, and the reader will quickly get your ideas. For your convenience, we created a plan to develop your ideas in each paragraph, So, use it and make your writing process easier!

  • Argument. Present your argument in the topic sentence of the paragraph in a way that directly answers the question. A hint: the most effective way to introduce the critical point is to place the topic sentence at the beginning of the paragraph. This will help the readers to concentrate their attention on a specific idea.
  • Comment and discussion. Explain the meaning of your argument and provide an economic analysis. Present clear evidence and persuasive arguments to solidify your position.
  • Connection. Link your comments with the vital point of the paragraph. Demonstrate the coherence of your evidence with the point.
  • Diagrams, tables, charts. If necessary, provide the reader with visual aids. Sometimes, an appropriate diagram or a suitable chart can say more than words. Besides, your paper will look more professional if you use any kind of visual aids.

Conclude your essay. In your conclusion, summarize and synthesize your work by restating your thesis. Also, it is crucial to strengthen it by mentioning the practical value of your findings. Remember to make your essay readable by choosing appropriate wording and avoiding too complex grammar constructions.

Create a reference list at the bottom of your economic essay if you referred to sources.

Thank you for visiting our page! Did you enjoy our article and learned something new? We are glad to help you. Don’t forget to leave a comment and share the article with others!

🔗 References

  • High School Economics Topics: Econlib, The Library of Economics and Liberty
  • Guide to Writing an Economics Essay: The Economics Tutor
  • How to Write the Introduction of Your Development Economics Paper: David Evans, Center For Global Development
  • Senior Essay: Department of Economics, Yale University
  • Developing A Thesis: Maxine Rodburg and The Tutors of the Writing Center at Harvard University
  • Academic Essay Writing, Some Guidelines: Department of Economics, Carleton University
  • The Writing Process: Writing Centre Resource Guide, LibGuides at Dalhousie University
  • Research Papers: KU Writing Center, the University of Kansas
  • Unpacking the Topic: University of Southern Queensland
  • Economic Issues: PIIE, Peterson Institute for International Economics
  • Areas of Research: EPI, Economic Policy Institute
  • Top 100 Economics Blogs Of 2023: Prateek Agarwal, Intelligent Economist
  • Current Environmental Economic Topics, Environmental Economics: US EPA, United States Environmental Protection Agency
  • Hot Topics in the U.S. Economy: The Balance
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Course info.

  • Prof. Jonathan Gruber

Departments

As taught in.

  • Microeconomics

Learning Resource Types

Principles of microeconomics, problem set 1.

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Preparation

The problem set is comprised of challenging questions that test your understanding of the material covered in the course. Make sure you have mastered the concepts and problem solving techniques from the following sessions before attempting the problem set:

  • Introduction to Microeconomics
  • Applying Supply and Demand

Problem Set and Solutions

  • Problem Set Questions (PDF)
  • Problem Set Solutions (PDF)

Problem Solving Video

In the video below, a teaching assistant demonstrates his approach to the solution for problems 1 and 4 from the problem set. The teaching assistant notes common mistakes made by students and provides problem solving techniques for approaching similar questions on the problem set and exams.

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MIT Open Learning

Economics 101

Principles of Microeconomics

Assignments & Exams

ASSIGNMENTS

  • Assignment 1PDF Format  2017 Econ 101 assignment 1  
  • Assignment 1 Solution Set PDF 2017 Econ 101 assignment 1 solutions  updated Oct 12
  • Assignment 2 PDF Format 2017 Econ 101 assignment 2
  • Assignment 2 PDF Format Solution Set PDF 2017-Econ-101-assignment-2-solutions edited Qu 10 part b
  • Assignment 3 PDF Format 2017 Econ 101 assignment 3
  • Assignment 3 PDF Format Solution Set PDF 2017 Econ 101 assignment 3 solutions
  • Sept 26 QUIZ Solutions PDF  2017 Fall Econ 101 quiz solution set
  • Sample Questions fro Oct 5th – Solution Set elasticity examples
  • Midterm 1 Solution Set 2017 ECON 101 MIDTERM solutions
  • Midterm 2 Solution Set 2017 ECON 101 MIDTERM 2 solutions

Final Exam Tutorials: Friday Dec 8 4pm and Monday Dec 11 2pm at CCC Classroom location TBA

Grade Calculator:

Input your grades into the green cells to review what grades you require to get a pass, B or A  – grade calc web

Objective : To provide students with practice answering short answer questions and quantitative problems associated with the major economic 101 concepts.

All assignments should include the following:

  • Title page with the assignment number and your name
  • Questions placed in the correct order
  • Show your work on the assignment and not just a single answer.
  • Paper size of 8 X 11, stapled (I don’t carry a stapler)
  • Neatly written or typed. Messy assignments will not be accepted.

You may work with others but you must complete your own work. If you have an answer that is too close to another student’s answer, you will both be given a 0 in the question without recourse. Assignments are due at the beginning of class .

No emailed assignments accepted!

Due dates/times will be posted on the assignments. Assignments are due at the beginning of class. Solutions to assignments will be posted via the course web site at the due date/time. Please note, to be fair to all students, late assignments are not accepted as the solutions are posted right after time/date due . There is no partial score for late submissions; you should regard assignments as helping you keep up with the course. There will be no makeup assignment, do overs or extra credit for missed assignments.

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Economics Examples

Here are examples of undergraduate research experiences in the social sciences that you can use as models for developing your own. You can also consider perusing examples from a wider range of disciplines . Each example includes learning goals, a context for use, a description of project needs, tips related to structuring and supporting the exercise, and means of assessment. Rather than search these by economic subject matter, consider and compare them as examples of forms of undergraduate research--remember that the goal of undergraduate research is the creation of knowledge. A project in, say, urban economics, may have a structure that lends itself well to an udnergradaute reearch experiences on a topic in an altogether different field.

Remember that some of the pedagogical practices described in other parts of Starting Point can be developed as undergraduate research experiences as well. Others can be considered supporting structures for undergraduate research.

Want to contribute your own example? Follow these steps for submitting an activity to Starting Point .

Jump to: Class-based Activities * Class-based Research Projects * Capstone Experiences * Student/Faculty Collaborative Research

Class-based Activities

Naturalististic Observation

  • Taking Risks While Driving: Are There Sex Differences? - This example, developed for psychology, describes a study of the hypothesis that there are sex differences in risk-taking. Design ideas from this naturalistic obervation approach to undergraduate research can serve as the inspiration for similar tests of other hypotheses in economics.

Quantitative Writing Assignments

Experiments

  • Who Gets Help? - This example from psychology describes a field experiment of the hypothesis that able-bodied individuals receive less help than those perceived to have an injury. The field experiment approach is one that can be considered in economics as well.

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Class-based Research Projects

Term papers and assignments.

  • A Survey Paper: Topics in Economic Growth and Development - This assignment helps students develop deeper understanding of a topic that could potentially lead to the development of a thesis proposal. It does not require them to complete an entire research project, but only asks them to develop a feasible research question based on a review of the literature.
  • Term Assignment: Family Economy of 19th Century Industrial Workers - This project, originally designed for a quantitative methods course for graduate students in history, consists of a set of assignments, distributed throughout the semester, that together move students through the steps of an empirical analysis. It is appropriate in courses where students will be able to use multiple regression by the end of the semester.
  • A Research Paper in Experimental Economics - In teams, students complete original research in experimental economics.
  • Replicating the Results of Famous Empirical Papers - This project provides an example of how students can engage in research by replicating and extending the methods and results of famous empirical papers (here, Solow (1957)).
  • Independent Term Paper I: Independent Research Paper in Introductory Econometrics - This example describes one way to design an independent research experience for an introductory econometrics course. It is one that includes the preparation of a research proposal shared with others in the class as well as a paper presentation at the end of the semester.
  • Independent Term Paper II: Research on Economics of Population - Here, students prepare an empirical term paper with the assistance of weekly computer labs and structured problem sets. This assignment is an example of one in which the dataset is chosen by the instructor, but the research question is developed and explored by the student.
  • Using Economic Theory to Predict Outcomes - Students apply stylized facts from the literature to a model, here the Solow model.

Service Learning, Community-based Learning, and Campus-based Learning

  • Using Census Data to Identify a Town's Housing Needs - In this service learning project for an elective course, students and faculty help a local non-profit identify area U.S. Census tracts most in need of its assistance in promoting decent and affordable homeownership. It serves as an example of an undergraduate research experience in which the research process is facilitated by a mixture of assignments, some requiring full-class collaboration and consensus, and others requiring small group and individual work.
  • The Effects of Condemned/Restored Homes on Surrounding Property Values - Here, students help a non-profit and their college's city understand some of neighborhood effects of condemned/restored homes. It is another example of a project mixing class decision-making with small group and individual activities.

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  • Economics Senior Thesis I - This is an example of a 2-semester (total 4 credit hour) senior capstone experience in which the first semester culminates in a research proposal and independent research is conducted in the second semester. A grading rubric is included.
  • Economics Senior Thesis II: The Effect of Race and Ethnicity on High School Graduation Rates in Florida - This is an example of an independent empirical research project. It includes tips on providing the mentoring, structure, and support necessary for independent work, and discusses the importance of developing a "research contract" with students. This project can be modified to be a group project.
  • Economic Senior Thesis III: Independent Capstone Project Predictors of Student Success in College - This is another example of an independent empirical research project. Like the previous one, it is full of tips on providing the mentoring, structure, and support for independent work, and discusses the value of a "research contract." This project can be modified to be a group project.
  • Economics Honors Thesis I: Three Semester Economics Honors Thesis - This is an example of a comprehensive program for scaffolding independent research. It is designed for honors students, but can be modified for any independent research project in economics. A grading rubric is included.

Student/Faculty Collaborative Research

Summer research experiences.

  • Summer Undergraduate Research Experience I - This example provides a framework for conducting summer undergraduate research with a student, with the ultimate goal being a faculty-student co-authored publication in a peer reviewed journal. A sample summer research grant proposal is included, along with a link to one such co-authored article.
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Economics Writing Example Rubric Learning outcome: Students will be able to apply economic theory and empirical data to analyze policy issues. Work product: Writing Assignment

Rubric is a modification of one presented by: Walvoord, B. (2004).  Assessment clear and simple: A practical guide for institutions, departments, and general education . San Francisco: Jossey-Bass Publishers.

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Economic Naturalist Writing Assignment

Wayne Geerling , LaTrobe University Published June 2011

https://doi.org/10.53593/n1301a

Introduction

Dismal science, the economic naturalist, final remarks, selected student essays.

“Most students who take introductory economics seem to leave the course without really having learned even the most important basic economic principles”, laments Robert Frank in “The Economic Naturalist Writing Assignment” , published in the Journal of Economic Education (2006). In fact, “when students are given tests designed to probe their knowledge of basic economics 6 months after taking the course, they do not perform significantly better than others who never took an introductory course” (Hansen, Salemi and Siegfried, 2002). Wherein lies the problem? How do instructors or lecturers overcome this? This case study will evaluate a pedagogical device pioneered by Robert Frank: “The Economic Naturalist Writing Assignment”, in which students are asked to pose an interesting question about some pattern of events or behaviour they have personally observed (a real life event) and to use basic economic principles to solve the question in no more than 500 words (Frank, 2006, 2007). In addition to being a useful means for teaching economics at a principles/introductory level, this writing assignment has practical benefits for teaching economics through real world examples and/or to students who are non-specialists. I will conclude with a series of questions (and answers) posed by students when I piloted this writing assignment in my own teaching in 2010.

Introductory economics classes have limited impact on economic understanding (Walstad and Rebeck, 2002, 2008). One cause of this is that most courses try to cover too many concepts, with the result that not enough attention or time is devoted to mastering the important (threshold) concepts (Frank, 2007). The idea that less is better in teaching economics is not new (Becker, 2004). Getting Economists to agree on a list of threshold concepts which should be mandatory in an introductory course creates a new dilemma (Frank, 2007). The most important thing, according to Frank, is that lecturers begin with a well articulated short list of principles, and then illustrate and apply each principle in the context of simple examples drawn from familiar settings (Frank, 2006). These principles will be revisited in different contexts later in the course. Students should then practice the principle by using it to solve simple problems taken from their own observations, and ultimately, to pose original questions which are then answered by the same basic principles (Frank, 2006). 

Another related problem is the image of Economics as a dry, uninspiring, abstract subject. Scottish writer, essayist and historian, Thomas Carlyle, once described the discipline of Economics as the “Dismal Science”. This pejorative term reflects the widely held view that this science is boring, inaccurate and gloomy (or, in line with Malthus, has gloomy predictions). As a discipline, Economics has been slow to adopt innovative approaches to teaching (Becker, 2001, 2003; Becker and Watts, 1996, 2001). Traditionally, most learning in the discipline is based on “chalk and talk” and teacher-centred, passive student learning. Ben Stein’s character from Ferris Bueller’s Day Off is a popular caricature of this “dismal science” in the classroom: highly abstract concepts delivered in a monotonous voice, which ultimately sends the students to sleep.

Most Economics programs are designed with graduates and PhD students in mind, even though they make up a miniscule number of students studying Economics: according to Frank, only 2% of American students who take an introductory economics subject major in economics (Frank, 2007). The comparable figure in the UK is 10–15% for students taking an economics module in a non-economics program. The heterogeneous makeup of the student body in any introductory class requires an approach to teaching economics which can embed threshold concepts (Sloman and Wride, 2009: see also ) in both students studying specialist economics degrees and non-specialists ( Embedding Threshold Concepts Project, Staffordshire University ). A point raised by Gary Becker in the mid 1990s is sadly still pertinent: “Students have unnecessary difficulty learning economics because textbooks generally do not have enough good examples of real-world applications.” (Becker, 1996).

Frank uses the economic naturalist writing assignment in his introductory economics courses. Students formulate their own question based on a real life observation and are encouraged to write free of algebra, graphs and complex terminology, in a manner understandable by a relative who has never studied economics (the so-called Grandma test) (Frank, 2007: see also ).

The term “economic naturalist” comes from an analogy Frank makes with someone who has taken an introductory course in biology: what types of questions would they be able to answer afterwards? “If you know a little evolutionary theory, you can see things you didn’t notice before. The theory identifies texture and pattern in the world that is stimulating to recognise and think about” (Frank, 2007).

Individual students may prefer particular learning styles, such as visual, aural or conceptual. Frank adopts the “narrative theory of learning”, which claims that the human brain absorbs information in narrative (story telling) form easier than in abstract form (equations, graphs and theory). This can be traced to the evolution of our species as storytellers and the importance of narrative in a child’s learning experience (Carter, 1993, Carter and Doyle, 1996, Doyle, 1997). His writing assignment, therefore, is a practical application of this approach. Students who come up with an interesting question are more likely to have fun and devote energy to the task, and talk to others about it, which reinforces the practical aspects of what they learned. The learning is now internalised and great stories are usually remembered forever (Frank, 2007).

The economic naturalist writing assignment can be seen as a means of reorientating introductory classes: giving students more opportunities to practice Economics (Hansen, Salemi & Siegfried 2002). I adopted this assignment as part of a new 2 nd year elective I introduced at La Trobe University in Melbourne, Australia, in 2010: “Economics of Everyday Life”. The aims of the assignment were shamelessly borrowed from Frank and encouraged students to:

  • Think like an Economist
  • Explain the intuitive logic of Economics
  • Apply economic reasoning to comprehend and solve problems in everyday life
  • Better understand the complexities of human behaviour

“Economics of Everyday Life” was aimed at different streams of students: those undertaking a degree or considering a major in Economics, as well as non-specialists from different Faculties opting for an elective. All students studying Business at La Trobe University (or any of its derivates) take “Introductory Microeconomics” in their first year, yet as we know from the work of Frank, their understanding of threshold concepts cannot be taken for granted. I provided a simple theory refresher at the start of the subject, and organised parallel workshops in week 1 of the semester for students who felt they needed additional help, to ensure that all students understood the basic microeconomic concepts upon which the subject is built.

All students were required to write at least one reflective essay for the semester along the guidelines set by Frank with one slight modification: the essay length was extended to a maximum of 750 words. Getting students to come up with an interesting question is easy for some but hard for most at the beginning. This form of assessment is not used in other subjects and students would typically ask me to “give them a question”. I experimented by getting students to submit an essay proposal, so I could check that they were on the right path (appropriate question, understanding of concepts involved, etc), but in hindsight this was too time-consuming and led to over-reliance on me. Next time I will limit my input to validating the question and encourage greater peer reflection in tutorials: students work in groups of 4–5 and give feedback on each other’s essay proposal.

The most immediate benefit from this writing assignment is getting the students to see the relevance of studying economics. “The essays allowed me to make real-life connections between daily problems and economics.” (subject evaluation, student 1) Once the learning becomes personal, students learn instinctively and naturally, which promotes critical thinking skills and deeper learning. “The essay contributed to my learning in that I was able to independently research and apply economic concepts to real world observed situations. This enabled me to use my individual economic thought to try and decipher human behaviour in given circumstances.” (subject evaluation, student 2)

The writing assignment is also a counter to the more prevalent means of assessment, which often rely on formalism and encourage rote learning of key concepts. “Rarely have I been asked to write an essay in an economics subject. I found essay writing to be a particularly effective way for me to convey economic concepts. Using mathematics and formulas is effective to an extent, however, having the opportunity to describe and critically analyse economic concepts in conjunction with real world scenarios extends the study of economics to a whole new level.” (subject evaluation, student 3).

The emphasis is not on teaching students the right way of thinking but to consider various hypotheses (rather than simple black/white dichotomies) and to apply economic principles in a consistent, logical and rational manner to arrive at the most plausible answer. The best questions, to paraphrase the subtitle of “Freakonomics”, explore the “hidden side of everything”, i.e. contain an element of counter-intuition. These essays “teach the student to develop the mind of an Economist and provide meaning to social phenomena through the primary principles of incentives, rationality, logic and other classical economic concepts. While, from the outset, a particular social phenomenon may seem an absurd, irrational proposition, it is only through a clear concise economic method that we see results can be deducted in a very logical manner. Thus economic principles become the lens through which we can view the world and make sense of it.” (subject evaluation, student 4)

And finally, a few words about the essays actually chosen for this case study. This sample of 15 represents just over 10% of the total essays written in the subject. The topics are quite varied: thinking at the margin and the rationality/irrationality dichotomy are explored through the purchase of fixed-gear bikes, decision to exceed speed limits and search for a place to rent. How markets work and what happens when they don’t was investigated through the conventional – the decision whether to purchase the last can of coke on the shelf – and price discrimination or gouging, a popular topic among Generation Y: the purchase of environmentally-friendly eggs, sale of soft drink on aeroplanes and designer denim shorts. A variance on the theme of markets is the informal market for personal relationships, a topic which, on the surface, appears to have little in common with Economics, but the essays on online dating and the contraceptive pill prove otherwise.

One of the most important lessons in Economics is that incentives matter. Students soon learn that incentives sometimes have perverse or unintended consequences. Does McDonald’s three-minute Drive Thru service promote better customer service? Will the new P plate rules introduced in Victoria reduce road safety?

It goes without saying that preference was given to essays which were interesting, illustrated the most important principles of Economics and were well written. Editing, when used, was applied judiciously: to fix typos and improve the general syntax, not to change the overall argument. These are essays from undergraduate students, not PhD students. To quote Frank (for the final time), they “should be viewed as intelligent hypotheses suitable for further refinement and testing” (Frank, 2007).

You may choose to disagree with some of these hypotheses but if you discover something interesting about the explanatory power of Economics, the decision to read this case study has been a wise one. Take a chance, use this form of assessment in your teaching, and you might be pleasantly surprised by what you and your students discover.

  • Why would a consumer spend up to $4,000 on a fixie bike when a standard one is much cheaper?
  • How should one overcome the perils of online dating?
  • Why does steroid usage lead to an inefficient outcome for society?
  • Eggspensive Taste: Why do eggs that cost 95c a dozen to produce sell for up to $9.00?
  • The Market is Amoral: Should you buy the last can of Coke on the shelf?
  • "Why are motorbikes exempt from paying fees on toll roads in Victoria?"
  • Why are designer denim shorts so expensive?
  • Does McDonald’s three minute Drive-Thru Service lead to better outcomes for society?
  • How has the contraceptive pill contributed to the split in the relationship market in Western societies?
  • Why are soft drink cans sold on aeroplanes half the size yet double the price of those sold in supermarkets?
  • Why are mobile phone calls more expensive than landline calls?
  • Why do some people choose to exceed speed limits whilst others do not?
  • Was my decision to live in Reservoir rational?
  • Will the new red P-plate driver restrictions decrease or increase road safety?

Becker, Gary (1996) “Not-so-dismal scientist”, Business Week , 21 October, p. 19.

Becker, William E. (2001) “How to Make Economics the Sexy Social Science” , Chronicle of Higher Education , 7 December, pp. B10–B11.

Becker, William E. (2003) “Undergraduate Choice: Sexy or non-Sexy”, Southern Economic Journal , volume 70, number 1, pp. 219–23. https://doi.org/10.2307/1061646

Becker, William E. (2004) “Economics for a Higher Education” , International Review of Economics Education , volume 3, issue 1, pp. 52–62. https://doi.org/10.1016/S1477-3880(15)30145-6

Becker, William E. And Watts, Michael (1996) “Chalk and Talk: A National Survey of Teaching Undergraduate Economics”, American Economic Review: Paper and Proceedings , volume 86, May, pp. 448–54. JSTOR: 2118168

Becker, William E. And Watts, Michael (2001) “Teaching Economics at the Start of the 21 st Century: Still Chalk and Talk”, American Economic Review Paper and Proceedings , volume 91, May, pp. 446–51. JSTOR: 2677806

Bray, Dr Margaret and Leape, Dr Jonathan (2008) “Writing for Economists: Embedding the Development of Writing Skills in Economics Courses” , London School of Economics and Political Science.

Carter, Kathy (1993) “The Place of Story in the Study of Teaching and Teacher Education”, Educational Researcher , volume 22, number 1, pp. 5–18. JSTOR: 1177300

Carter, Kathy and Doyle, Walter (1996) “Personal Narrative and Life History in Learning to Teach”, in J. Sikula, T. J. Buttery and E. Guyton (eds), Handbook of Research on Teacher Education , 2nd edition, New York: Macmillan, pp. 120–142. ISBN: 9780028971940

Davies, Peter and Mangan, Jean, (2008) “Threshold Concepts in Economics: Implications for Teaching, Learning and Assessment” , The Handbook for Economics Lecturers , The Economics Network.

Doyle, Walter (1997) “Heard any really good stories lately? A Critique of the Critics of Narrative in Educational Research” in Teaching and Teacher Education , volume 13, issue 1, pp. 93–99. https://doi.org/10.1016/S0742-051X(96)00039-X

Frank, Robert (2007) The Economic Naturalist: In Search of Explanations for Everyday Enigmas , New York: Basic Books. ISBN: 9780465002177

Frank, Robert (2006) “The Economic Naturalist Writing Assignment”, Journal of Economic Education , Winter 2006, pp. 58–67. https://doi.org/10.3200/JECE.37.1.58-67

Hansen, W. Lee, Salemi, Michael K. and Siegfried, John J. (2002) “Use It or Lose It: Teaching Literacy in the Economics Principles Course”, American Economic Review , volume 92, number 2, May, pp. 473–77. JSTOR: 3083452

Sloman, John and Wride, Alison (2009) Economics (7th edition), Harlow: FT Prentice Hall, pp. 8, 23, 24, 44, etc. ISBN: 9780273721307

Sloman, John and Garratt, Dean (2010) Essentials of Economics (5th edition), Harlow: FT Prentice Hall. ISBN: 9780273722410

Walstad, William B. and Rebeck, Ken (2002) “Assessing the Economic Knowledge and Economic Opinions of Adults”, Quarterly Review of Economics and Finance , volume 42, pp. 921–35. https://doi.org/10.1016/S1062-9769(01)00120-X

Walstad, William B. and Rebeck, Ken (2008) “The Test of Understanding of College Economics”, American Economic Review: Papers and Proceedings , volume 98:2, pp. 547–51. JSTOR: 29730079

“Embedding the Development of Writing Skills in Economics Courses”: http://www.economicsnetwork.ac.uk/projects/mini/bray_writing.htm

“The Economic Naturalist Writing Assignment”: http://www.siue.edu/~wrichar/economic%20naturalist%20writing%20assignment.pdf

“Threshold Concepts: Index”: http://media.pearsoncmg.com/intl/ema/ema_uk_he_sloman_esseconlr_5/thresholdconcepts/index.html

“Threshold Concepts in Economics”: http://www.economicsnetwork.ac.uk/handbook/printable/threshold_concepts.pdf

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Applying economics in everyday life

At the start of the academic year, I always feel a little pressure to justify the study of economics. Students come up asking things like, should they do economics or history? It’s hard to know what to say, but to get people excited about economics it’s good to try and think how economics can be applied in everyday life. Some of this is just common sense, but economics can help put a theory behind our everyday actions.

Buying goods which give the highest satisfaction for the price

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This is common sense, but in economics, we give it the term of marginal utility theory. The idea is that a rational person will be evaluating how much utility (satisfaction) goods and services give him compared to the price. To maximise your overall welfare, you will consume a quantity of goods where total utility is maximised given your budget. For example, is it worth paying extra charges by airlines, such as paying for more leg-room? Or pay to get priority boarding? Economics suggests we need to evaluate the marginal benefit of these services compared to the marginal cost. See: Extra charges by airlines

Sunk cost fallacy

A sunk cost is an irretrievable cost, something we cannot get back. For example, suppose we sign up for a gym membership at $40 a month for a whole year. We are committed to paying $480, whether we go or not. If we are feeling unwell, should we go to the gym to get our money’s worth or should we write off the sunk cost and maximise our marginal utility for that particular day? See: sunk cost fallacy

Opportunity Cost

economics assignment examples

The first lesson of economics is the issue of scarcity and limited resources. If we use our limited budget for buying one type of good (food), there is an opportunity cost – we cannot spend that money on other goods such as entertainment. Opportunity cost is an intrinsic aspect of most economic choices. We may like the idea of lower income tax, but there will be an opportunity cost – in this case, less government revenue to spend on health care and education.

There’s no such thing as free parking

waiting-narrow-road-parked-cars

Another example of opportunity cost – no one likes to pay for parking, but would we be better off if parking was free? Most likely not. If parking was free, demand might be greater than supply causing people to waste time driving around looking for a parking spot. Free parking would also encourage people to drive into city centres rather than use more environmentally friendly forms of transport. The result would be that free parking would increase congestion; therefore although we would pay less for parking, we would face other indirect costs. (time wasted)

Behavioural economics and bias

Traditional economic theory assumes that man is rational. However, the work of behavioural economics suggests we can be prone to bias and irrational behaviour. For example, we may be prone to a present bias where we overvalue pleasure in the short-term and ignore long-term implications. For example, consuming demerit goods like alcohol or not saving sufficiently for retirement. The insight of present bias suggests we make decisions our future self would not make. If we become aware of these bias and irrational behaviour, then we can make better decisions which improve our long-term welfare.

See: Behavioural economics

Irrational exuberance

Another issue in behavioural economics is that of irrational exuberance or when we get carried away by an asset bubble. Can we be sure we will not get carried away by a boom and bubble? History suggests that many investors are over-optimistic about their ability to leave the market at the optimal time and can feel that this time is different.

See: Irrational exuberance

On the other hand

In economics, there’s always another way of looking at the world. Borrowing is bad, except when it isn’t. Nothing is black and white in economics; it depends. For example, government borrowing to finance pensions for an ageing population can lead to an unsustainable rise in government debt. However, government borrowing during a recession can help the economy recover.

Diminishing returns

If we like chocolate cake, why do we not eat three per day? The reason is diminishing returns. The first chocolate cake may give us 10/10. The second cake 3/10. The third cake may make us sick and give a negative utility. People may have different opinions about when diminishing returns set in. Some students may feel this is after the second pint, other students only after considerably more. There are also diminishing returns to money. That is why we don’t spend all our time working –  extra money gives increasingly less satisfaction and reduces leisure time

DIminishing returns to wealth/income

utlity-function-risk-aversion

A similar concept is that of diminishing returns to wealth and income. Does an extra $100 give us more utility? Yes, but it depends on our current income. If we have a very low salary, the extra $100 will make a big difference. But, if we earn $100,000 a year, we may not notice that extra $100 a year. The importance of this is for choosing the right balance between work and leisure. What is the value in working a long working week, if the extra money earnt has a limited marginal utility?

Externalities

pollution-smog

Economics may feel we are promoting selfish ends – firms maximise profits, consumers maximise their personal utility. Adam Smith claimed pursuing selfish goals ended up in improving the greater good. But, in economics, we also try to consider the impact of our actions on other people. If a firm produces chemicals, it may make a profit, but cause an external cost of pollution. To ignore this external cost would be to create an inefficient outcome. We should make the firm pay the cost of its pollution so that it has the incentive to minimise or halt external costs. Externalities are everywhere. Even your decision to study economics could have positive externalities in the future. For example, you could end up being an economics teacher helping others learn all about economics.

Public goods not provided by the free market .

public-good

The free market has many advantages. Private firms tend to be more efficient, innovative and respond to consumer preferences. However, many goods and services would either be not provided or under-provided in a free market. Public goods like street lighting and law and order. Also, public services like health care and education would be provided in insufficient quantities. Therefore, to optimise social welfare there is a need for government intervention through taxes and direct public provision. We may dislike taxes, but we would dislike not being able to see a doctor.

Should I worry about automation and new technology?

There are concerns that new technology and automation will lead to job losses and some people losing out. If our job is threatened by new technology is the fear justified? Economic analysis suggests there it is a fallacy that new technology leads to permanent job losses. This is known as the Luddite Fallacy – though some jobs are lost, new ones are created. Automation and new technology are not guaranteed to make everyone better off – especially in the short term. See: Pros and cons of automation

luddite-fallacy

Macroeconomics affects everyone

Everyone is affected in some way by macroeconomic issues such as inflation and unemployment. Inflation can reduce the value of your savings. If you keep cash under your bed during high inflation, you’d be better off trying to buy gold or some physical assets. Mass unemployment can cause society to fragment, therefore there is a need to adopt policies to try and reduce unemployment.

Life-cycle hypothesis

LIFE-CYCLE-WEALTH

The Life Cycle Hypothesis states that to maximise lifetime utility, we should try to smooth our consumption patterns over the course of our life. It is not good to have substantial income when we are old and unable to move. Spending some money in our student years will give greater overall utility. This justifies taking out a student loan to pay back when we are working and then saving for a pension in our retirement.

Examples of economics in everyday life

  • Is the price of Starbucks a rip-off?
  • Is it rational to put money in an honesty box?
  • How will you be affected by a devaluation of the Pound?
  • How will you be affected by low-interest rates?
  • How will you be affected by a recession?
  • 10 reasons to study economics

Last updated: 10th November 2021, Tejvan Pettinger , www.economicshelp.org, Oxford, UK

11 thoughts on “Applying economics in everyday life”

Very nice article especially to beginners (students). It’s easily understandable.

interesting

Great, i like economics, its interesting and fascinating.

THEN BATTER THINKS TO DEVLOPMENT A APPLICATION ON PREFROM A APPLICATION TO ECONOMICALS THINKS IN HUMAN ON UNDER CONNECTION IN HUMAN THINKS

concepts are very clear and nite becouse initially importance of economics..

Very easily explained.Make more like these.

make a poem about economics using many different economic topics and email it back to me please its for an economics project !!!

Being an economics student ,it is Very informative for me ….

Very comprehensive thoughts. The application of both micro and macro economics in daily life is lot yet people don’t realize. For example , when you go to mall to purchase your daily needs or other products, you simply calculate opportunity cost between two products. And as a rationale consumer select one product over other who’s marginal value is more. Soon meet you with more such concepts

I like this. I really helps me as I have to constantly explain these concepts everyday. It’s just nice to know others feel the same.

Quote inspiring. Our everyday application of Economics concepts are enormously. We always use public roads ,streetlights, sewer lines and public security. We also complain about those not using them well without knowing that once these goods and services are provides, we can not stop others from using it, neither can the consumption by others reduce the quantity available for our consumption.

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Sample Assignment on Economics (pdf)

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Real-Life Examples of Opportunity Cost

What do economists think about strawberry smoothies? That depends on how good the kiwi flavor is instead—plus a range of other choices. Which stirs up the idea of opportunity cost.

How is opportunity cost defined in everyday life?

“Opportunity cost is the value of the next-best alternative when a decision is made; it's what is given up,” explains Andrea Caceres-Santamaria, senior economic education specialist at the St. Louis Fed, in a recent Page One Economics: Money and Missed Opportunities .

The Scoop on Scarcity

We can’t have everything we want in life. This is where scarcity factors in. Our unlimited wants are confronted by a limited supply of goods, services, time, money and opportunities. This concept is what drives choices—and, by extension, costs and trade-offs, Caceres-Santamaria says.

She uses the example of deciding to buy a $7 smoothie at the mall. She notes that many people would view the choice as a single one based on whether you want the drink.

Instead, she suggests wearing “a unique pair of ‘economist glasses’” to see the decision differently, asking:

  • How much do I value this?
  • What am I giving up now to have this?
  • What am I giving up in the future to have this now?

Infographic showing trade-offs for buying a $7 strawberry smoothie

Costs That Are Seen and Unseen

Our inclination is to focus on immediate financial trade-offs, but trade-offs can involve other areas of personal or professional well-being as well—in the short and long run.

That’s why Caceres-Santamaria challenges us to consider not only explicit alternatives —the choices and costs present at the time of decision-making—but also implicit alternatives , which are “unseen” opportunity costs.

“It's about thinking beyond the present and assessing alternative uses for the money—that is, not being shortsighted,” she writes.

What are some other examples of opportunity cost?

  • A student spends three hours and $20 at the movies the night before an exam. The opportunity cost is time spent studying and that money to spend on something else.
  • A farmer chooses to plant wheat; the opportunity cost is planting a different crop, or an alternate use of the resources (land and farm equipment). 
  • A commuter takes the train to work instead of driving. It takes 70 minutes on the train, while driving takes 40 minutes. The opportunity cost is an hour spent elsewhere each day.

Is Opportunity Cost a Big Deal?

We might not consider lost studying time or $7 spent on a smoothie costly decisions, but what about bigger choices—like the decision to stretch and buy a more expensive home versus a starter home, or to spend $1,500 more on an upgraded trim package for your next car?

Caceres-Santamaria describes how opportunity costs are neglected even more when making higher priced purchases. Using the car-buying example, a consumer might default to thinking of the relative value of the $1,500 upgrade to the base price of the car, say, $18,500.

Rather than comparing the fancier configuration to the vehicle itself, it might be more helpful to ask what else that $1,500 could buy outright.

Why the Rush?

“Most of our decisionmaking that involves money is based on immediate or sooner-than-later consumption,” Caceres-Santamaria notes. “The excitement of consuming today is valued significantly more than the thought of consuming in the future.”

It’s human nature: We grow impatient, tugged by the immediacy of a promised benefit versus a payoff that’s possibly years down the road.

If seeing is believing, it’s worth looking at the future value of money —a concept many of us have read about in retirement plan literature or heard from financial advisors.

The Future Value of Money

Example 1: the one-time windfall.

Let’s say you got a surprise $4,000 windfall and want to use it for a getaway trip. Why not? It’s found money, so there’s no loss to you—unless you think about the opportunity cost.

If you nixed the trip and plunked your money into an income-producing product that earned an average annual interest rate of 3%, compounded monthly, you could find yourself with a cool $5,397 in 10 years.

Line chart comparing total contributions vs. future value of saving a one-time gift of $4,000 vs. spending money on a trip

Notes: Chart is for illustrative purposes only. Created with Compound Interest Calculator on Investor.gov

Wait another five years, and your funds could grow to $6,270 . (Neither example factors in the effects of inflation and taxes owed.)

That’s the added benefit in money terms. You’ll also want to consider the experiences that an extra $1,400 or more—the future earnings on your $4,000—could make possible.

Example 2: Small, regular savings over time

That’s an example of investing a single lump sum over time. What about the opportunity cost associated with daily purchases, such as the $4.49 caffè mocha you pick up three times a week? How much money could you find yourself with if investing that $54 each month rather than spending it?

If you dropped the coffee (careful!), invested $54 per month and earned the same 3%, compounded monthly, you’d have $7,619 to dunk your doughnut into in 10 years.

Line chart comparing total contributions vs. future value of savings on every day items like buying coffee

Too long to forego that regular mocha? Cutting the time frame in half to five years would still give you $3,554 in savings. (Again, these sums don’t include the impact of inflation and taxes.)

These examples are striking, especially when considering that a $4.49 caffè mocha habit over time can dwarf the seemingly larger decision to splurge on a $4,000 getaway trip.

Want to test some of your own opportunity cost what-ifs? Caceres-Santamaria encourages consumers to avoid “autopilot” mode when it comes to financial decisions. Start small—even with a pack of gum—and brainstorm as many alternative uses for your money as you can. 

Additional Resources

  • Opportunity Cost - Online Course for Consumers
  • There is No Such Thing as a Free Lunch
  • How Does Compound Interest Work?
  • Opportunity Cost - Economic Lowdown Podcast Series

Doreen Fagan

Doreen Fagan works in External Engagement and Corporate Communications at the St. Louis Fed.

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This blog explains everyday economics, consumer topics and the Fed. It also spotlights the people and programs that make the St. Louis Fed central to America’s economy. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.

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