Why is economics important in today's world?

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If you asked most people to define the term economics, they would more than likely relate the word to finances, the economy, or wealth. In reality, the field encompasses a broader definition and much more diverse parameters than financial ones. The seminal work published in 1998 by Samuelson and Nordhaus, Economics, redefined the word and embraced the notion that the field of economics may apply to other areas, including human behavior, environmental science, or virtually any field of endeavor. In their introductory text, Samuelson and Nordhaus propose that economics is the study of scarce resources and how to best allocate the resources among competing interests. The modern definition explains the importance of economics to the working of our modern world.

Consistent with Samuelson and Nordhaus is the practical application of viewing every problem from the perspective of scarcity and efficient allocation. By no means does framing a problem within an economic framework remove the emotional, political, or human aspect of decision making. Economics provides a rational, if not somewhat logical justification for why people act in the manner they do when given the task to work with limited resources. Economics separates the empiricists from the humanist in their response to a problem. The world is in dire need of compromise between the two positions, not the extremes of either. Solutions to issues require a deep understanding and comprehension of data or facts, but the humane aspects of decision making cannot be ignored.

Economics is important because it provides a perspective for decision making in which facts have equal weight with emotion to improve the human living condition. In the absence of data, efficiency is compromised, scarce resources are inappropriately allocated, and the inevitable result is waste. Relying on the emotional, political, or philanthropic appeal as a problem-solving methodology has grave consequences to the very people being served. Conversely, when dealing with human needs, relying wholly on data to drive decision making can have adverse effects as well. Waiting until all the facts are in, all of the interpretive work is complete, and there is no more available information paralyzes the decision-making process. Problems such as famine, hunger, disease, and genocide can not wait until all of the facts are in. Action must be immediate and swift, regardless of the potential for waste.

Economics is essential as it is the one field with the potential to address the micro and macro problems of a global society without abdicating the power of the human spirit to solve the problems of humankind.

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