To Think Economically!

“Everyone can develop the ability to think economically to make rational decisions. That means to contrast decisions’ costs and benefits”.

JDHR

 

To think economically is the most important input to make rational decisions in the economic game. That means to be aware of economics’ logic and its influence on human life. The economy seems like a zero-sum game that every player has to game conscious about the economic effects of his/her decisions. Also, the economy can be seen as a cooperative game, when every player can do their best to construct general wellness. In spite of those views, to think economically is not just about to compare prices, or is not just about to “know” how economic theories work into diary life. To think economically is about to be rational with resources uses in taking decision processes.

But, what implies to think economically? That is a specific way to do every decision in which process plays an important role in, the effort to maximize benefits and profits, and on the other hand, to minimize costs and risks. The conundrum of that has to be the information access and its understanding. For maximize benefits and profits but minimizing costs and risks, there is necessary to do a balance between decisions’ costs and benefits, accordingly with the information that is possible to get. As a result, people can make decisions diary with a rational background.

So, then how can we think economically? This question does not pretend to give a recipe. The point is to propose a way to think according to the Economy, and not against it. To do that, it is essential to have an economic plan that matches a personal life plan. Consequently, it is vital to set personal goals (in whole human spheres) and warn risks that there are probably in the same way as settled goals. This situation has to conduce to identify resources that help to avoid risks, overcome problems and get goals. Key tasks to think economically have to be to prioritize actions and manage smartly resources. To think economically is opposite to improvise personal actions and take decisions without any sense about the plan. Therefore, to think economically is on the opposite side of make decisions pushed only for passion. That plan has to be flexible because it is vital to try different strategies to get the main idea (life plan). The main idea is in human life, as a compass is in a cross-ocean adventure because if the sailor lost the destiny, the compass can be used to retake the control!

To think economically is a perfectible skill and there isn’t necessary to hold a degree in Economics or Finance. There is possible to equip and reinforce this skill through Economic and financial education because that sort of education is about well-being. The last point coincides with the predominance of general interest instead of the individual interest hegemony. That is because when people develop economically think skill can prevent financial frauds, tricks, false investment opportunities and illegal traps where non-educated people on financial and economic topics usually lay down in. The real cost of this kind of situation is measurable socially because poor people are usually the most common victim of economic and financial ignorance. However, the academic literature has portrayed that the relationship between formal education and economic and financial literate is not positive. There is why public policies globally have to be conducted to educate people in Economics and Finance throughout develops the economic think skill in everyone everywhere.