Source: Adam Smith Institute
by Madsen Pirie
“Many people equate economics with the stock market, personal finance and business management. Whereas what economists actually study are incentives, choices, trade-offs, markets, institutions, and how scarce resources are allocated. Money is involved, but it’s only one piece. Non-economists tend to ignore trade-offs. They often assume we can have lower taxes and higher spending, or strict environmental rules and unchanged consumer costs. Many think we can have price controls and no shortages. Economists emphasize opportunity cost; everything has a cost, even if it isn’t a monetary one. Non-economists sometimes confuse individual behaviour with aggregate behaviour, reasoning from personal experience. They say things such as ‘I lost my job, so the economy must be worse,’ or ‘I’m spending more, so inflation must be rising.’ Economists focus on aggregate interactions, which often behave differently from individual components.” (12/04/25)
https://www.adamsmith.org/blog/what-non-economists-often-misunderstand