When we hear news reports about monetary policy, GDP, job reports, consumer spending, etc., we think about economics. While these are all important elements of economics, they don’t tell the whole story. By considering economics vs. applied economics, we begin to see its broad scope in society, as well as in our daily lives.
Economics is the theoretical model of how societies function. Applied economics is the implementation of that model broadly and in a myriad of specific circumstances.
Whereas we often think of economics as an esoteric discipline removed from our everyday experience, we see applied economics applying that discipline to real-world issues that affect us all.
Applied Economics: The Science of the Possible
Politics is, according to a well-worn aphorism, the “art of the possible.” Put another way, politics is the art of governance, how we structure and organize our social life. If politics is the art of social organization, applied economics is the tangible science of social organization.
Dr. Aleksandar (Sasha) Tomic, Program Director of Master of Science in Applied Economics at Boston College’s Woods College of Advancing Studies, says applied economics is “thinking about the way things fit together.”
“Economists do not have to be tied to what we think of as the traditional economist career.” In fact, through applied economics, we have the analytical tools to glean insight from data. Applied economics informs policy and decision-making across all sectors of society, public and private.
Five Examples of Applied Economics
Let’s look at five ways we use applied economics in our modern world.
- Environmental Economics: What is the cost of command-and-control environmental regulation vs. market-based incentives? How do we put a price on carbon emissions? Should we? Applied economics helps frame solutions for these questions.
- Behavioral Economics: How do we employ economic insights and analysis with cognitive psychology to predict how people behave in specific contexts? Applied economics shows us how.
- Law and Economics: The two are inexorably intertwined. Laws codify ethics and markets, and human behavior. Applied economics predicts how those laws are best implemented.
- Marketing and Economics: Effective marketing relied on informed, evidence-based decision-making. Consumer behavior, policy and ethics, market analysis, and projecting profit-and-loss determine any marketing initiative’s success. Applied economics offers the analytical tools to incorporate each element into an integrated whole.
- Healthcare Economics: Even before COVID-19 gripped the world, healthcare was an industry in rapid transition and under severe stress. Predictive analysis, resource allocation, and determining policy initiatives that support public health are critical roles for applied economics in healthcare.
The fact is, all social factors working together for the shared benefit of all is the purview of applied economics. In a sense, we are all economists now.
Applied Economics and The T-Shaped Professional
The practical knowledge and skills gained from applied economics are relevant for leaders and decision-makers in any context. Based on core economic principles, applied economics focuses on implementation more than theory. It comes down from the tower and gets into the nitty-gritty details of how things work.
Learning how to apply these concepts creates a breadth of knowledge complementing the depth of expertise in any specific field. This results in the “T-shaped professional,” someone able to apply broad analytical, ethically sound, collaborative skills to the issues at hand. These are the people who understand the challenges, know how to collect and analyze the pertinent data to find a solution, and then communicate their insight to their peers.
Graduate studies in applied economics develop what Dr. Tomic calls the “economic intuition” organizations of all types seek in a complex world. The T-shaped professional who understands how things fit together.
Online Master’s in Economics
The online Master of Science in Applied Economics program from Boston College is your path to more significant influence as you help shape a better world.
Students entering the program join a global network of over 180,000 alumni, sharing their insight as they hone their analytical and leadership skills solving real-world problems.
The MSAE program curriculum provides students the skills necessary to analyze and interpret data across various fields, contexts, and disciplines. With these skills, graduates can play key roles in mapping solutions and informing crucial technical and policy decisions.
Some of the areas of study in this wide-ranging (think “T-shaped”) program include:
- Fundamental theory: Examine the theoretical principles of micro and macroeconomic theory.
- Data analysis: Learn the tools and methods of data analysis, interpretation, forecasting, and predictive analysis: study Big Data Econometrics and the rapid advance of machine learning.
- Law and economics: Explore how markets function. Analyze how firms relate to markets. Consider market regulation and its influence on competition, innovation, pricing, and organizational strategy.
- Ethics and public policy: The art and science of the possible. Investigate how public policy is made and implemented. Evaluate when it’s best to regulate or legislate. Assess the role (or lack thereof) that ethical consideration plays in how policy is formed.
- Behavioral economics: The intersection of economic and cognitive sciences. A fascinating look at why people do what they do and what influences lead to better individual decisions.
The program entails five required core courses and over two dozen electives. With a wide variety of elective study areas, students can tailor the program to their needs and interests. Ten courses are needed to earn a Master of Science in Applied Economics degree.
If you are ready to advance your career influencing policy and decision-making in the private or public sphere, earning an MSAE degree at Boston College is an excellent first step.