Think Like An Economist | Marrying The Economic Mindset To Our Human Curiosity

Albert Marshall defines economics as, ‘the study of man in the ordinary business of life’ When we talk about economics most people assume its about money. If you actually  study deeper you realise it is about how people make decisions, not just about money but every aspect of your life. Who to love, who to marry, who to hate and perhaps even  assassinate. 

We are all actors in the economy rather than just spectators. We turn on the tv and  listen to lectures and see the economy and believe we have to nurture it and that the economy is more important than we are. That is completely false. We are the economy. We need to focus on each of us making good decisions. In micro economics we learn how to make good  choices and apply them all the time. 

Today with technology we have all the data. That card you signed up for knows a lot  about your families spending habits, your phone knows how much you walked on average  everyday. Economic theory is understanding, organising and using this data. All these stats  can be used to confirm how people make decisions and it gives us insight on peoples behaviour. Long gone are the days of assumptions. In the current reality we don’t have to  assume we can observe and describe reality.  

Some people may feel uneasy about reducing the unpredictability of human behaviour with numerical predictable data. No one wants to describe themselves as ‘typical’. If a drunk  friend was in a driving accident there is no comfort in knowing that walking drunk is more dangerous than driving. If you are an Indian bride molested by your husband you gain absolutely nothing by learning that the media is empowering the ‘typical’ girls in rural areas. 

But in a world like ours with great atypical number of people differentiated on countless  bases we can gain great value in discovering the baseline and knowing what happens on average is a good start. Through that we protect ourselves from the tendency to make our  decisions on exceptions and irregularities rather than on reality. 

During the summers of 2001 The USA came to be known as the ‘summer of the  sharks’ The media put out petrifying stories on shark attacks on humans. A prime example was on the story of Jessie Arbogast, an eight year old boy playing in the gulf waves of Florida  when a shark rampantly ripped off his right arm and bit into his thigh as well. The New York Times had several articles on how to save yourself from sharks. The ‘times’ ran a cover page  on shark attacks – ‘Sharks come silently, without warning. There are three ways they strike: the hit-and run, the bump-and-bite and the sneak attack. The hit-and-run is the most common. The shark may see the sole of a swimmer’s foot, think it’s a fish and take a bite before realizing this  isn’t its usual prey. ‘ 

Definitely scared now. A level headed person might never go near an ocean now. But how many shark attacks would you think happened that year? If we take a guess, cut that guess into half and now cut that into another half followed by a few more times. During that entire year of 2001, all around the world there were just 68 shark attacks out of which only 4 resulted in deaths. Not only are those numbers way lower than the media delusioned us into believing but  they weren’t even higher that the earlier years or in the years after.  

Between 1995 and 2005 there were 603 worldwide shark attacks each year with 5.9 of  them fatal. In simple words the headlines that year could’ve just as easily been ‘Shark attacks  about average this year’ but now that wouldn’t have sold it to the public would it? 

So for a second instead of thinking about that poor boy and his shark tragedy,  economics shows us the big picture. A world with more than 6 billion people, only 4 of them  died in 2001 from shark attacks. More people are probable run over by a paparazzi car driven  by media houses. Elephants are said to kill 200 people each year. So why aren’t we petrified of  them? Probably because those victims aren’t living in the limelight.  

This may also have something to do with pop culture where elephants are child friendly characters while sharks are portrayed as villains with sharp cone teeth. 

Some people may argue that statistics can be made to say anything, defend the  indefensible but the economics approach aims for the opposite. It helps us understand a situation disregarding personal opinions, emotions, fear or favour. It lets numbers speak the  truth. 

The introduction of television in rural areas have helped create awareness and  substantially helped the backward classes. This doesn’t mean that we accept that the power to the television is completely positive.  

The economic approach isn’t made to describe the world as we want it or fear it to be, but explains it as it actually is. Most of us want to change the world, but to change the world it is important to understand it first.