BY BORDI JAEN
METHINKS this is a fitting epilogue to my previous article entitled “Tempus fugit” where I talked about my journey as a writer.
The Visayas Economics Conference hosted by the Philippine Economics Society concluded a few days ago and, by God’s grace, my entry was able to make it. The conference itself was very enlightening and well-executed.
I thought it best to share with you all my entry which revolves around the essay’s theme: “How and why is Economics important in our everyday lives”.
Interestingly, the teacher who invited me to join the conference and its competition didn’t know that Economics would be my chosen field for my undergraduate degree. Oh, God, You work in mysterious ways!
The entry itself was untitled but I think that this article’s title is quite fitting as the essay’s theme pertains to economics. It’s also a double-entendre but I leave it to the reader to muse about the other. I leave the reference list as it would make this article far too long but the necessary crediting is present. May this be found enlightening.
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My tito Excel is a priest. He is a remarkable priest who gives remarkable homilies. In a part of one of those homilies, he was explaining the etymology of the word “economics”. The origin was “Oikonomos” from the Greek words “Oikos” or home and “nomos” or management (Baldassarre et al., 2017).
He explained that the origin of economics was the management of a household where the family had to divide the necessary labors and manage the resources that they had. It was as important then to manage the household as it is now important to understand Economics. After all, isn’t economics, in its very core, simply household management, despite its mutation and exponential multiplication over the centuries?
Economics is a social science. As with all of science, its concepts are present in every facet of society one way or another. It is a misconception that only business people, government officials, and economists need to learn economics. The omnipresence of economic concepts requires everyone to understand it, from the great captains of industry to the humble fisherfolk of the shores. These concepts work whether you understand them or not.
Economics doesn’t have very far-reaching consequences yet for the young whose main concern is the shipping fee of a Shopee delivery or a weekly school allowance, if any. Economic literacy wields its might when one blooms into adulthood, where independence breaks the links of parental safety net and the responsibilities of personal finance or dependents come into play.
Therefore, economics must be placed highly as a subject that needs to be understood early on if one wants to be prepared for adulthood and mature citizenship. Rather than risk the consequences of being ignorant, wouldn’t it be better to be educated of a science that can have a considerable effect on one’s life?
What is economic literacy?
According to Yasmin et al. (2014), it is the understanding and knowledge of basic economic theories, concepts and their application. Examples of relevant economic concepts being that of inflation, scarcity, demand and supply, trade-off, and etc.
When can someone, specifically a student, be considered economically literate?
To Salemi (2005), it is when he or she can apply basic economic concepts years later, in situations relevant to his or her lives and different from those encountered in the classroom.
Economic literacy will benefit the individual in two aspects: keeping money and growing money.
On the first aspect, being literate about economic concepts allows a person to make sound decisions with regard to how well his or her money should be spent. A study by Efendi et al. (2019) showed that economic literacy helped individuals exercise self-control over their impulsive purchases. Since an individual’s resources are limited, an understanding of economics allows individuals to understand how they may be able to maximize the utilization of their resources. In layman’s terms, a person is able to get more bang for his or her buck.
On the second aspect, economic literacy allows individuals to understand where they should put their money for it to grow at a level of risk their comfortable with; be it a new venture, stocks, or bank deposit.
Economic literacy is increasingly important for household decisions about how to invest wealth and how much to borrow in financial markets (Japelli, 2010). Correspondingly, economic literacy allows individuals to understand where they shouldn’t put their money in, as the people of Capiz so painfully learned when they discovered that their money, some of which were entire lifesavings, suddenly disappeared in a flash, stolen by a slimy swindler.
The benefits of economic literacy aren’t only available at the micro scale. There are benefits to reap for an economically literate populace at the macro scale. After all, an economy is composed of individuals and their resources. There can be no economy without people!
A citizenry properly knowledgeable about economics will not only be able to use their knowledge to advance their resources, but they can use it to properly understand and judge the economic fundamentals of the government and therefore, use such knowledge to judge if a government properly manages the economy or not.
Lipset (1959) aptly says that economic literacy has equal significance for democracy. People who have knowledge about economics can understand the government’s policies better than those who don’t possess this understanding.
A country’s economy is generally judged as doing well when the majority of its people are doing well. Since sources and common sense have all pointed to the financial benefits for the economically literate individual, an economy improving is a sign of a people financially improving. A fundamentally sound economy is able to afford better social welfare for its citizens as well as improve its public institutions and infrastructure such as schools, hospitals, roads, and etc.
A good economy may give the populace higher wages, lessen poverty, and overall improve the standard of living. Therefore, economic literacy is supposed by many to be an essential part of the country’s future development (Yasmin et al., 2014).
In conclusion, economic literacy is advantageous to both the individuals and to their country. The understanding of economics is imperative when the effects of its invisible hand are so obviously visible. It is not a suggestion but a necessary responsibility. It is our duty to fulfil if we are to change things for the better not only in our own household but as well as in this great household that we call the Philippines./PN
