Learning to Apply Your Econ Knowledge to Things Besides Economics

I like Economics. I think it’s fun. And, I was told when I started studying economics that I would be able to apply my knowledge to the real world in real and helpful ways. That has turned out to be true, but until recently I hadn’t really figured out how to apply my econ knowledge to fields besides economics.

Politics and government Professor Seth Weinberger was explaining to my connections class the concept of states interacting with each other. He explained that at the heart of comparative politics, states all act in their own best interest to obtain as much power as they can. Acting in this way, they trade land, resources, political favors, and other things to achieve the maximum amount of power for themselves. And, by trading these things between each other the states set standards for how much power or influence each resource was worth.

Hearing this lecture, I was transported back to intro economics, learning about utility maximizing consumers, trading between each other and inadvertently setting market prices for homogenous goods. Through the analogy of states as consumers and power as utility, I had just received a sparknotes version of Econ 170 from Professor Weinberger. I had never seen such a close metaphor for the economic principles I have learned.

Next, Seth explained the concept of a prisoner’s dilemma to the class. This concept I was very familiar with, having worked with prisoner’s dilemma in multiple econ classes, but I was excited to see how it could be used in something besides economics. The prisoner’s dilemma was used in explaining the concept of treaties banning weapons too indiscriminate in their destruction from theaters of war. For example, two states might find it advantageous to ban nuclear weapons. They might form an agreement not to use nuclear bombs on eachother, but if a few years later the two states end up at war, they will both be incentivised to cheat on their agreement and obliterate eachother’s largest cities. This was my first experience seeing a Nash Equilibrium outside of an econ class, and it got me thinking. What other concepts had I learned in econ classes that I could think about in terms of Politics and Government?

Thinking more about this connection, one might be able to transpose some basic economic assumptions to the study of comparative politics, such as states having complete, transitive and monotonic preferences when they decide how to best allocate their resources to maximize their power. The analogy isn’t perfect, but is goal of welfare economics similar to the goals of the United Nations, the European Union, or other international governing bodies? A welfare economist might think about making pareto-optimal improvements in the distribution of flour and sugar between two consumers in the same way a regulator in the United Nations might think about pareto improvements in the distribution of medical and financial foreign aid in two developing countries.

So, in learning the basic principles of economics, have I also learned some basic principles of political theory by accident? It seems like I have. I do not suggest that a few undergraduate economics classes should qualify me for a degree in political science, but I do believe I’ve stumbled upon a lesson that might be helpful for students of economics like myself: Take some Politics classes. You might be astonished by the parallels you will find, and there is a very real chance that you might strengthen your understanding of how to apply your knowledge of economics to something that isn’t economics.

About David Shireman

David is a third year economics major at the University of Puget Sound.

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