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Economics All Around Us: Making Sense of Everyday Choices
It’s a common misconception that economics is boring and too complex for the average person to understand. I remember speaking to my particularly talkative hairdresser about studying economics, to which she replied “I could never study that” and “It’s all just a bit confusing really”. And while I don’t deny that economics can be challenging, I also believe that economics IS for everyone and that it can be applied to our daily lives much more than you might think.
Take choosing what to do on a Saturday afternoon, for example. You might decide to meet friends for lunch, but that means giving up the chance to watch your favourite TV show. In economics, this is called opportunity cost, which means that when you choose one thing, you’re giving up the next best alternative. Economists use this idea to analyse decisions on a much larger scale. For instance, when a government decides to spend more on healthcare, it might have to cut funding for education. Or when a government chooses to invest in improving roads, it might have to delay funding for expanding public transport. However, the same principle of opportunity cost applies on a small scale in our everyday decisions, even if we don’t realise it.
Imagine walking into a store and seeing a jacket marked down from £100 to £50. Suddenly, it feels like an incredible deal, even if you wouldn’t have considered buying it at £50 to begin with. This is anchoring bias, a concept from behavioural economics, which looks at how we fixate on the first piece of information we see—like the original price—and lets it shape how we judge value. Economists study anchoring to understand how it affects consumer behaviour, helping businesses set prices that feel more attractive. And we, as consumers, experience its effects every day, often without even noticing it.
Take eating chocolate, for example. The first piece might taste amazing, but by the fifth or sixth, the enjoyment starts to wear off. In economics, this is known as the diminishing marginal utility—the more of something we have, the less satisfaction we get from each additional unit. Economists use this concept to understand why people often prefer variety and why demand for a product may decrease as consumption increases. It also explains why companies introduce new flavours or limited-edition products to keep consumers interested. However, we experience diminishing marginal utility all the time, whether it’s scrolling through social media or playing your favourite game.
I hope you can see that economics isn’t just about numbers and theory: it’s something we experience every day. Whether it’s choosing what to watch or how governments spend billions, economics is constantly shaping our world in ways we don’t always notice.
If you're interested in learning more about economics, feel free to reach out to me or any economics teacher for further information.
James Orchard, Year 13
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Year 10 Business Studies students are currently engaged in the 10X Challenge. Each team of around 5 students are pledged £10 for four weeks to get their business idea off the ground. The challenge allows students to put theory into practice, develop their entrepreneurial skills and give them some experience of what it is like to run a business. Students have set up businesses selling goods ranging from bouncy balls to home-made bracelets and services from car washing to garden maintenance (see pictures). We wish them the very best of luck and look forward to hearing all about their experiences after half-term!
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After an 8-hour flight, we landed in Washington where we rested our heads before heading off to the Capitol Building. We were given an incredibly detailed and interesting tour, learning the basis of the US Justice and Government system. We also walked along The Mall, seeing the Lincoln Memorial, Martin Luther King Jr's Memorial, the Vietnam Memorial and the White House to name a few. My friend and I also had time to look around the American History Museum, seeing Dorothy's red shoes and Jonny Coltrane's saxophone!
The Young Enterprise team has been busy creating more candles for their upcoming market stalls. If you’re in the area, pop in and see them at Old Spitalfields market on Tuesday 27th February or Greenwich Market on Wednesday 13th March.
The team has been lucky enough to benefit from the guidance of their business advisor, ex-BGS student Henry Wong. Henry was once the Managing Director of a Young Enterprise team here and is now a Developed Markets Equity Analyst at HSBC. He has been meeting with the team on a regular basis to get updates, help with goal setting and guide the team. Henry is pictured below with some of the team at one of their team meetings.
