What is economics?

Economics is about making choices to achieve objectives. It views the behaviour of people and organizations as the outcome of such choices. It studies the interaction of purposeful decision makers and the role of the strategic environment and informational advantages in determining the outcome. It is about the importance of recognizing limits and the need to make trade-offs between competing objectives.

Economics provides an analytic framework and a set of tools that give insight into everything from the choices we make in our everyday life, to the best way of achieving social objectives, to optimal business decisions. Economics is not business; it does not tell you how to manage a firm or be an entrepreneur. But it does provide the analytic foundation for many types of business decisions. The study of strategic interaction (game theory) is part of economics as is analytic finance. Economics also provides an understanding of the broader economic environment in which business operates. However, economics is much more than this.

Economists are at the forefront of all of the major policy issues, including: climate change, globalization, economic development, immigration, and healthcare. Economics provides the tools for fully assessing the costs and benefits associated with alternative policies, both individually and in combination. Because society's means are limited, economists' ability to determine how best to make trade-offs is highly valued. Because of the analytic training they receive and the comprehensive point of view they adopt, economists are also well-trained in identifying the unanticipated consequences of particular courses of action, another valuable trait.