IN an educational setting, what do economics, history, mathematics, and physics have in common?
Well, in the last year, each of those four fascinating subjects has been — in different instances, for different young adults I've spoken with — the primary target of verbalised juvenile frustration and disdain.
Whenever I meet new people, despite my innate introversion, I initiate and sustain conversations by unleashing my native curiosity and asking about their lives, their likes, their dislikes and their career goals.
Far too often in recent times, such interactions have exposed me to these vehement statements uttered by my newfound friends:
"I hate physics"; "I am useless in mathematics"; "History is so boring"; or "Economics makes no sense to me."
Each time I've probed to discover the reason for their antipathy towards those four important subjects, it usually boiled down to bad or ineffective teaching. That's unfortunate because financial literacy and investment methodology, knowledge crucial for long-term personal financial health, are dependent on those four subjects.
EBB AND FLOW
The analytical skills we gain when nurturing a deep understanding of physics and mathematics translate to readier financial ratio analyses, and an enhanced capacity to estimate compounding investment values or, conversely, purchasing power erosion through pernicious inflation.
Also, grasping the long sweep of history over decades, centuries or even millennia grants us a deeper understanding of the ebb and flow of civilisation trends, while embedding economics into our worldview or so-called money lens, can make us much better investors.
Yet most people lack sufficient passion in all four subjects to synthesise a viable economic or financial worldview to safely navigate Earth's financial oceans.
Consider economics, the field of study focused on the allocation of scarce resources, or more simply the processes of the production, consumption and transfer of human wealth. So, clearly economics is phenomenally important. Yet most people never pay heed to it because it either bores or intimidates them.
That's a great pity because the better we understand economics, the better we'll understand the sphere of money and our place in this material world, which is simultaneously one of bounty and scarcity.
UNDERSTANDING ECONOMICS
In 1798 the English economist Thomas Malthus published a slim book entitled An Essay on the Principle of Population. In it, Malthus argued that human populations will always outstrip agricultural output and thus, lead to famines. In the more than two centuries since his important, yet flawed late 18th century Malthusian warning, what we've seen happen, though, are:
1. Science and technology have raised crop and livestock yields astronomically; and
2. Population growth in well-educated and wealthy nations has been steadily falling.
But in the early 19th century, when Malthus's ideas and warnings were first disseminated, they raised alarm about humanity's future. So much so, more than half a century after the initial publication of his grim book, Scottish historian Thomas Carlyle coined the term "dismal science" — in 1849 — to describe the entire field of economics.
Ironically, what has occurred throughout the many, many decades since the first Industrial Revolution of 1760 to 1840, has been more heartening than depressing because of snowballing ingenuity in the fields of science, technology, engineering and, yes, even economics.
In the 20th century, we endured two World Wars, and yet between 1901 and 2000, humanity's numbers still grew from 1.6 billion to about 6.1 billion, and now in March 2024, stands a tad under 8.1 billion.
With more and more people on Earth living better lives despite localised pockets of misery caused by pollution, global warming, water stress and war (most heartbreakingly today in Ukraine and Palestine), the number of economic and financial transactions occurring worldwide is ever-rising. As that grows, the importance of understanding economics soars.
My advice: If you aren't already well-informed about the subject, start exploring it by going online and researching basic concepts like price determination at the intersection of supply and demand curves, elasticity of demand and the importance of GDP (gross domestic product) growth.
Also pick up introductory texts on economics — some of which now come even in comic book formats. Given the interconnectedness of all fields of knowledge, you might also consider buying for yourself simple introductory texts in history, mathematics, and physics.
PRICE OF SUCCESS
Sadly, too much has been said recently about the relative drop in standards within our Malaysian public education system. While the authorities work hard on reversing that slide through enhanced syllabuses, each of us can — and should — focus on learning more about how the world and, even more specifically, how the world of money works.
The renowned Canadian-American economist John Kenneth Galbraith, who died in 2006, wrote: "In economics, as in anatomy, the whole is much more than the sum of the parts."
So, as each of us does what we can to thrive in this increasingly complex world, investing time and attention to understanding the economy better can result in positive financial outcomes. We just need to pay the price.
After all, as another famous deceased economist, Milton Friedman, said: "There is no such thing as a free lunch."
We must pay the price for success.
© 2024 Rajen Devadason
Rajen Devadason, CFP, is a securities commission-licensed Financial Planner, professional speaker and author. Read his free articles at www.FreeCoolArticles.com; he may be connected with on LinkedIn at www.linkedin.com/in/rajendevadason, or via rajen@RajenDevadason.com. You may also follow him on Twitter @Rajen Devadason and on YouTube (Rajen Devadason).