Why is the study of economics important to consumers?
The study of economics is very important to consumers. By understanding basic economic principles, consumers can make wise choices. Understanding the concepts of supply and demand will help a consumer know the best time to buy discretionary items. It will help them make decisions about which products are good to buy or which careers are good to pursue. Understanding principles about money will help consumers make informed choices about savings and/or borrowing. Many people are in financial difficulty because they don’t understand how credit works. They may not have a financial relationship with a bank or credit union. This puts them in a difficult position when they have to borrow money. (For young people, credit card debt is a huge issue.) They may not understand the ramifications of how fast compound interest can lead to credit card debt problems. Understanding how to negotiate is an economic skill. By knowing how to negotiate, people can save a lot of money. Understanding how to comparison shop is another important economic skill. Many people don’t understand the importance that economics play in their lives. By understanding economic principles, consumers can help to place themselves in a good place financially and economically.
The study of economics is important on a number of levels, the first of which is that most people are consumers. They purchase homes, buy cars, invest money, and live in countries where economic decisions affect their everyday lives. During their lifetimes, most adults will need to understand the economics behind various types of interest rates when purchasing a home or a car; they will need to understand supply and demand when working with energy sources, and they will be required to have some knowledge of the ramifications of market fluctuations as they make investments either independently, through a broker, or as part of a package through their place of employment. Being able to carry on knowledgeable conversations about economic principles affects schools, public services, and utilities.
In the larger picture, when people are literate in personal economics they become more able to understand global and national economics. A common language develops which increases understanding of the ramifications of fluctuations in global markets, commodity prices, and reduces inappropriate reactions to these fluctuations. This helps them make decisions as an electorate when voting on economic issues, and for political candidates.