This is one of the commended entries for the Economics Network Student Challenge 2011 by Mihai Paraschiv (University of Kent).

“When an artist looks at the world, he sees colour. When a musician looks at the world, he hears music. When an economist looks at the world, he sees a symphony of costs and benefits”. Do you like Brahms? I think yes. But what would Brahms have to do with economics? He was after all just a composer, who wrote and left behind music for people to enjoy. …See the point now? He was a composer, but in essence, his talent is human capital, his music a positive externality and the enjoyment we derive from it consumption.

Brahms has to do a lot with economics. Everything does. Keynes used to say that apart from economics little else rules the world. This is indeed true, not in the sense that the Universe in its entirety is explained by economics (we’ll leave this challenge to the unified theory of physics…!), but that what matters for us as human beings – society and earthly satisfaction – is. We all function on economic principles. We’re rational and selfish, we respond to incentives and we think at the margin. And the world we live in and harness functions on economic principles too. We all face trade-offs and have to give up some things for others. This does not mean however that it is a bleak place, captured by a “dismal science” as Thomas Carlyle put it. Trade can make everyone better off. Plus, the way we have thought of organising things, in a market, is usually a good way of doing it.

But still, why study economics at university? The answer, I believe, lies in the life of the composer, Brahms. The reason is threefold: to do what you are good at, to understand and improve the way the world works and to earn money for it as well.

Potential economists are usually endowed people with a good aspiration for theoretical rigour and analytical problem solving. The impression that the study of economics does not require particularly high and diverse endowments is all but true. A good economist probably has to possess a combination of endowments. Paraphrasing Keynes again, he has to be, to a certain extent, a philosopher, a mathematician, a historian, a politician. It is precisely because you might hear this symphony of costs and benefits, in all its tonal colour and bustling rhythm, that you may wish to study economics. Economics is the science which proposes the impossible, the improbable and the immoral as choices. The kind of way of thinking that economics presupposes cancels decency and familiarity, in questions like the choice to default on your national debt or the decision of women to become prostitutes or wives. In this abandonment of reticence in thinking and acting lies its power and attractiveness.

Studying economics allows you to understand and improve the way the world works. As an economics student you learn how to think like an economist. You learn economic concepts like opportunity cost, market equilibrium and comparative advantage. You work with economic models of supply and demand, macroeconomic behaviour and international trade. Through this training you will better understand how the world in which we live works, knowing at the same time you acquired it at university from academic economists, who possess a solid background in the theoretical reasoning of the science, backed by viable didactic methods. Possessing the way of thinking of economics, you will then be able to look deeper at profound issues of our time: economic integration in the European Union, globalization, inflation, economic development… Most economists engage in analysis which is in part empirical. They use theory and data for policy-making, to estimate economic relationships, test economic hypotheses and predict economic outcomes. This may be your career choice. As a policy-maker you might work for instance in the Bank of England, helping keep prices low, or the Government, helping assess the impact of regulation such as the minimum wage. It is up to you to practice a bit of (consumer) choice theory in this new world of opportunity…!

Often, studying at university is seen as an investment into future income. The value of an economics degree in today’s world is certain, so all the effort of studying economics does not come without a benefit. It is a well documented fact that economics graduates enjoy high earnings premia, which express the increased amount of income that someone with a degree in economics earns as compared to someone without one. These earnings premia are higher than in health, law, business and other social sciences.  What’s more is that they are even higher for female graduates, who can expect to earn two-thirds more income in a certain job than a fellow female student who stopped studying at A-level. Economics clearly has potential for earnings, even if you’re a man…

So, if you like Brahms, you might think of studying economics at university.