The importance and utility of the subject of Economics can be judged from this fact that it is now considered to be one of the most important and useful subjects as compared to any other branch of knowledge.
The reasons for gaining its importance are That it makes human welfare its direct and primary concern it helps in raising the quality of economic life. As it greatly helps in the solution of economic and social problems so it exercises an over-whelming influence on the minds of the people.
In the words of Durbin “Economics is the Intellectual religion of the day”. About the importance of Economics Malthus remarks “Political economy is perhaps the only science of which it may be said that the ignorance of it is not merely a deviation of good but produces great positive evil”. Edmunt Burks is not wrong in saying that “the age of chivalry has gone that of sophisters, economists, and calculators has succeeded”.
Economics is a social science. It is directly or indirectly concerned with the aim of welfare of human being. Its study has great educational value and practical importance. The advantages of the study of economics are as under.
Following points show the educational value of the study of economics.
Widening Metal Horizons:
The study of economics increases man’s capability of thinking, understanding and deciding. A person can solve his economic problems more optionally and can avoid from any economic crises with the help of the relationship between the facts and results, and various economic policies.
Sense of Responsibility:
The study of economics guides people to use their limited resources to satisfy maximum out of their unlimited wants. Its theories provide a guidance to use the resources properly. In this way one proves himself as a good and responsible citizen.
Increase in Information:
The study of economics provides useful information on the matters related to the daily life, like money and inflation, population and its problems, trade cycles, banking system, international trade, industry and agriculture, employment, deficit financing, budget, currency system, determination of prices, etc.
Information About Economic Systems:
The study of economics enables people to become acquaintance with the different economic systems, their advantages and disadvantages, and makes it easier to choose a better system for their country.
Increase in Argument Power:
The study of economics enables a person to keep in view the economic fluctuations, conditions and situations and to decide to take positive steps or give reasons to take positive steps with solid arguments in the light of statistics given by the authority i.e., economic survey or annual reports published by the government, etc.
Attitude Toward Thrift:
The study of economics induces people to minimize their expenditures-i.e., consumption or investment. It guides people to act upon various laws and enables them to face the situations like inflation (where prices tend to rise, purchasing power of the people decreases, and they become unable to meet their day-to-day necessities). Similarly, it guides the producers to adopt economy when they hire the factors of production. It results in a reduction in cost, which leads to maximize profit. Thus, economics teaches to avoid from extravagance.
Following points show practical value of the study of economics:
Human desires are unlimited while means to satisfy them are limited. One always tries to satisfy maximum wants. For this purpose, economics helps and guides through its laws and principles, like law of diminishing marginal utility, law of equi. marginal utility, law of demand, indifference curves, theory of revealed preference, etc. A consumer makes expenditure in the light of these laws and satisfies his/her maximum of wants with the help of scarce means.
The persons busy in business can be good business man when they have perfect Knowledge about the government’s monetary, fiscal and commercial policies. As businessmen are concerned with buying and selling of goods and Dices, therefore, they must have awareness about tax system, economic fluctuations, currency and banking system and forces of demand and supply etc.
For Employers or Entrepreneurs:
The employers or entrepreneurs employ the factors of production in such a way that to minimize the cost and maximize the output. They try to make optimum combination of the factors. For this purpose, they get guidance from an economic model of marginal productivity theory. Similarly, they keep elasticity of demand in view for the determination of prices. They set high prices for the goods with less elastic demand and low prices for the goods with more elastic demand and in this way maximize the profit.
Study of economics is important for workers. Because if the workers have fully awareness of market condition, then their bargaining power will be strong. If they are well aware of their rights, they can fight for higher possible wages. Labour unions can only be strong and effective, if their leaders are having the knowledge of economics.
For Agricultural Sector:
People living in agricultural sector and having dependence on agriculture, should also be furnished with the knowledge of economics. Because through the study of economics farmers can come to know about the agricultural policy of the government, agricultural credit policy of the banks, sale and purchase of agricultural output and input from the markets, application of the law of diminishing returns on this sector, concepts of intensive cultivation and extensive cultivation, etc.
For Industrial Sector:
People busy in industrial sector should also be well, aware of economics because industrial policy of the government, sale and, purchase of industrial output and input policy, factors of production and the methods of their use, selling of output in domestic and foreign markets, export and import policies, etc. All this information can only be obtained from the study of economics.
For Employment Opportunities:
A person having knowledge about (or specialization in economics has always many opportunities of employment in private as well as government sector.- The employers managing the industrial sector, commerce, banking sector, administration, institutions, insurance companies, within the country abroad, etc. always give preference to economics, because economists guide them how to minimize the cost of production, and maximize their revenues and profit.
Stimulate to Proper Allocation of Resources:
Every country has natural and man made resources but everywhere all these resources are scarce. That is, their supply is less than their demand so Economics guides to allocate all these resources on different necessities comforts and luxuries in such a way that resources should be optimal utilized according to the preferences given. In this way, human welfare will b maximized.
Solution of Economic Problems:
Economics gives practicable policies, theories and models to solve economic problems like inflation, over population, unemployment, disequilibrium in the balance of payments, shortage of food, debt burden, outdated methods of production, backwardness of agricultural and industrial sectors, imperfections of markets etc.
Study of economics has a great value for the bureaucrats because they establish various policies in the light of economist’s view within the given statistics about economy and try to solve the problems on priority basic to get economic development.
For Finance Minister:
Economics also provides guidance to the finance minister who announces fiscal policy in the light of economic condition of the country. He/she determines the heads of expenditures of the government and to meet them creates the sources of revenue with the aim of maximization of social benefits and prosperity.
For Economic Stability:
Study of economics has great value for the economic stability, because its models and policies help and guide to keep economic position of the people stable, which results into peace, price stability, saving, investment and consumption stability and similarly all this keeps the economy from strikes, lock-outs and boycotts, etc. As a result the economy reaches to the nearest point of full employment.
For Economic Planning:
Study of economics provides guidance to make economic plans in a systematic and statistical manners. The planners analyze the available resources, fix the achievable targets and implement the policies made for. Only in this way the standard of living can be raised and the goal of economic development can be achieved.
For Economic Development:
Study of economics informs us about the stages of the economic development of different countries and policies and strategies adopted for achieving economic development. It makes easy to analyze the economic position of the country and to suggest the best applicable policy. In this way there can be increase in the employment and investment opportunities. Per-capita income and standard of living of the people, basic infrastructure of the economy, social, economic and political position, of the country, status in globalization and use of modern technology.
For International Trade:
Study of economics informs us about the economic policies of the other countries. Every economy has its own structure, banking system, trade system, preferences, markets, customs and traditions, etc. Economics gives us true pictures, which enable us to trade in international market.
For Developing Countries:
The developing countries possess a large quantity of natural resources but due to lack of technology and capital. They are not able to make their utilization or unable to explore even. They possess human resources but quality of their education, health and know how is very poor.
As a result, their utilization does not give qualitatively better output. The people who are educated and Physically healthy provide their services in developed areas of the world, that is why, underdeveloped economies remain fasten in the vicious circle of poverty.
Basic knowledge of the economics possesses the magic of giving awareness to the people to develop their political, social, cultural, traditional and economic condition. In the light of the principles of economics, if developing economies works efficiently, they can increase their status of living and use their resources optimally.
After discussing all the above points it can easily be concluded that economics which is the science of production, consumption, distribution and exchange of wealth – and wealth which is not just a piece of metal or precious metals but all the goods and services which satisfy human wants directly or indirectly and used for increasing the standard of living up to the living standard – not only is this rather all the other social sciences seem to be a part of this science as every person is faced with economic problems and everyone is busy in earning incomes according to his capabilities in one or another way, only to live in a good standard.
Thus, it is necessary that everyone should know about economic science whether they are linked with agricultural sector, or industrial, with business or services, rich or poor, ordinary people or prominent persons, educated or illiterate – whatever their status is, they must know the rules, laws, principles, theories or models of economics because this enables them to improve their social, political, cultural and technological status. They can rationally decide about the problems expected to face in the future. Thus, the economy as a whole can be made as an independent and developed through the application of economic principles.
In the words of Sir Henry Clay:
“Some study of Economics is at one a practical necessity and a normal obligation”