It’s easy to think the economy has nothing to do with you—you can’t see it, feel it, or engage with it in any tangible way, and if it comes up in the news, it might sound too boring and complicated to bother with. But in fact, the economy is nothing but the cumulative result of the way you live your life, and the way everyone around you lives theirs. Our behavior, choices, and values shape the economy and our place within it. So if we’re trying to work out how the economy works, a good place to start is the economics of our own lives.
We’re all connected somehow. Every decision that we make has a ripple effect, sometimes so wide that we can barely track it anymore. Some of those affected will be close to us—friends, family, colleagues. Others will be much further away—the creative minds that launched the internet, the farmer who grew our vegetables, the factory worker who produced our plastic bag.
As every single decision on the planet has this ripple effect, we’re constantly being affected by choices other people are making, sometimes to our knowledge, and sometimes totally over our heads. This could be anything from a politician’s new policy affecting our taxes, to us making a ‘spontaneous’ decision to buy something without realising that a company had strategically placed a billboard advertising it in front of our house the week before.
With all these economic connections, how do we decide to get along together? Do we work together? Do we compete? Do we do a mix of both or something else entirely?
People disagree on what would work best. Sometimes this is because we value different things. And sometimes it’s because we have different ideas on human nature and psychology: what motivates people, how they work together best, how they feel about risk, security, and opportunity, and how they behave in crowds. So to get economics right, a good place to start is with better understanding ourselves!