The Influence of Economics on Behaviors of People

Viewing human behavior, and society through the lens of economics is an excellent way to understand the world in a more rational, objective way. Looking at Maslow’s hierarchy of needs, the first to levels of basic humans needs revolves around economics. The very basis of human lives revolves on the need for food, water, shelter, clothing, security, health, resources, and property. After that has been established and built, and only after, can the individual seek to fulfil other needs of belonging, self-esteem, and self-actualization. Therefore, it is a reasonable argument to say that the behaviors of people are greatly influenced by economics or the resources they need for a relatively comfortable life.

People’s actions are constrained by various variables. Income being a major variable in the actions of individuals. Think about this scenario for a moment. If an average lower-middle class person suddenly was given millions of dollars, their daily decisions in life would be altered dramatically. For one, they will most likely elevate their buying habits. They will start to buy more expensive consumer goods, maybe travel more, and perhaps feel more confident. Money plays a peculiar role in the lives of people and can definitely change the attitude, beliefs, actions, and morals of individuals. One aspect of human behavior that is effected by economics or wealth is crime. In countries and cities whose citizens are more impoverished crime rates tend to be considerably higher. This might be due to people feeling that their basic needs are not being met, such as food and shelter discussed in the previous paragraph. When a person’s basic needs are not met and they feel pushed into a corner, crime seems like a justifiable way to cheat the system and gain an upper hand. We see this in drug markets, were people risk there very freedom and lives in order to make a profit. Expenditures on reducing crime can be altered in different ways. By increasing the punishments of those convicted crime is expected to decline, and thus less funds would be needed to fight crime. It is astounding to contemplate the minds of criminals who take on such high risk for monetary gain.

A political argument that might greatly undercut drug markets is to simply allow certain drugs to be legal. This will create a new legal market which where are seeing emerge with the liberalization of marijuana. The United States has the largest incarcerated population of any country by a large margin. If the politics of incarceration are tied to economics then some policies need to change such as using rehabilitation rather than severe punishment for seemingly minor crimes. Every decision comes with cots. When it comes to human capital, or the abilities of people to perform labor and their levels of production, there are many factors that come into play. People make decisions based on what part of the country they grew up, the socioeconomic status of the family they grew up in, and other factors. In today’s day and age many people choose to go to college because an investment in education usually leads to a more lucrative career. Not only that, but depending on the major and the outlook of careers for said major, some people chose paths that lead to greater career success than others. Some degrees are in very low demand in the work force, and some are in high demand. Those with skills that are difficult to learn, or with rare specific skills are usually highly desired.

The society we live in is a competition. We may have moved past the hunter and gathers stage of humanity, but humanity is still very much in a competition. The thing is those that already have money, wealth, and plenty of resources tend to keep them. It is much easier to gain capital, or wealth if you already have it, rather than starting from nothing and trying to build from scratch. Resources breed more resources. Lack of resources, breeds nothing unless an individual works hard and makes many right decisions throughout their life. Additionally, economics plays a role in family structures. Many individuals would agree that it is best to get married and start a family when one has first secured a stable source of income, or a secure career. Economics has also changed the way people choose their spouse. In the 1960s typically men earned the money and married women who stayed at home. Since the feminist movement, today people marry others of similar education level and job earnings. To make that clear, people who obtained a bachelor’s degree will most likely marry someone else with a bachelor’s degree, and those that did not go to college will on average marry someone else that also did not go to college. This is an interesting socio-economic change.

Furthermore, the average age of the first marriage has changed from 23 to 29 for men and about the same for women. People are getting married later and choosing to put career stability first? Or it could possibly be a number of variables contributing to later marriages, including social media. Economics plays a considerable role in politics. Many people choose political leaders exclusively on the basis if they will improve or hinder the countries, or state’s economy. Economic institutions such as the Federal Reserve are caretakers of the country’s economy. They chose to raise or lower interest rates and print more money. Using these tactics, the Federal Reserve can either slow down or kindle the economy. The interesting thing is that the Federal Reserve is supposed to be a decentralized entity and it is composed of banks that function like private corporations. In this democratic country of ours, how much of an influence does the average United States citizen have on the decisions made by the Federal Reserve to alter the economy?

Viewing human behavior threw an economic lens is extremely useful in understanding the world. An assumption that is used when viewing human behavior threw an economic lens is that people act rationally, weighing the depths of their decisions, contemplating the pros and cons. In reality people are highly irrational, often acting impulsively and without making life altering decisions without much contemplation. Despite that fact, economics is still a tool that can be used to understand the world, its people, and the actions they take. Using an economic lens is not only helpful in understand the past behaviors of societies and individuals but is also dynamic in trying to accurately predict the future. For example, global warming is already gone too far. The effects of global warming will increase droughts, make agriculture more difficult and could displace millions of people on cost lines. Viewing the world threw economics could help mitigate the damage and prepare policy makers and average citizens for the future.