Economics is a large field, and the tools of economics help study a wide range of social phenomena.
For example, the most recent edition of the Quarterly Journal of Economics – one of the world’s most important journals of economics, where economists publish their research – has research papers on, among other things, how trade affects carbon emissions, whether working in mixed-gender teams helps reduce gender stereotypes, and how racial bias affects second chances in the criminal justice system. Economists study these questions both by applying mathematics to predict human behavior (called economic theory) and by analyzing real-world data (called econometrics).
If you’re an aspiring economist, someone interested in the field, or hoping to explore the unique perspectives economics can give you, it is useful to know about the various sub-disciplines of economics. In this post, we’ll go over many of those sub-disciplines, and offer you some resources to help you learn about any of them that you’re interested in.
Behavioral economics studies questions at the intersection of psychology and economics. When people see others doing apparently irrational things, they often treat those actions as unpredictable. Behavioral economics says that even irrational actions are often predictable, and people tend to be irrational in particular ways. To learn about behavioral economics, we suggest the books Thinking, Fast and Slow by Daniel Kahneman and Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard Thaler and Cass Sunstein.
Development economics is the branch of economics that tries to understand how we can improve well-being in the world’s poorest countries. A typical household in Australia earns $45,000 a year, while a typical household in India earns a mere $3,000 a year. What explains this difference? Why have some countries, like South Korea, improved their living standards so rapidly in a few decades, while others have stagnated? To learn more about questions like these, we recommend Marginal Revolution University’s online course on development economics, the book Poor Economics by Abhijit Banerjee and Esther Duflo, and the book How Asia Works by Joe Studwell.
Economic history is the study of economies and economic events in the past. The global economy has transformed substantially in the past few centuries – living standards have improved and life is much better for most people, but problems like inequality and climate change are growing. Economic historians try to understand the global economy before and during these transformations, researching periods of peace and prosperity, and periods of colonialism and slavery. To learn more about economic history, we recommend the blog Pseudoerasmus and the book Why Nations Fail by Daron Acemoglu and James Robinson.
Environmental economics tries to understand how economic forces affect our natural environment – how they can cause some of the world’s environmental problems and how they can be used to fix them. Research in environmental economics looks at questions like the relationship between economic growth and climate change, what the path for sustainable energy is in the future, and whether meat alternatives are likely to become widespread in the future. We recommend the books Climate Shock by Gernot Wagner and Martin Weitzman, Compassion, by the Pound by F. Bailey Norwood and Jason Lusk, Air by Dean Spears, and Grilled by Leah Garces to learn more about the economics of the environment.
Financial economics applies economic principles to research how businesses and people raise and lend money. Its main focuses are asset pricing, the study of what determines the prices of investments like equity, bonds, and real estate, and corporate finance, which studies how businesses can more effectively attract investors. To learn more about finance, we recommend this Coursera course on financial markets.
Game theory is the study of how people make decisions when the consequences of their actions depend on the decisions of others. For example, a driver decides which lane to go to based on where she expects the other drivers to go, so she can avoid traffic; World Chess Champion Magnus Carlsen picks his move based on what his opponent will play; a country chooses its military’s budget based on how much it expects its adversaries to spend. We suggest Avinash Dixit and Barry Nalebuf’s book The Art of Strategy or this series of articles to learn about game theory.
Health economics uses the principles of economics to study questions related to health – personal health decisions, ways to improve global health, and health policy undertaken by governments. Health economists study questions as wide-ranging as how to be a good parent, what the best ways are for countries to combat COVID-19, and how to do as much good as possible as a philanthropist trying to improve global health. To learn about health economics from different perspectives, we recommend Emily Oster’s blog on the economics of parenting, Ryan Bourne’s book Economics in One Virus, Diane Coffey and Dean Spears’s book Where India Goes, and Peter Singer’s book The Life You Can Save.
International economics is the branch of economics that deals with economic interactions across nations, such as international trade and loans between countries. Researchers in international economics try to understand why countries that export lots grow more, whether barriers to international trade work or backfire, and what determines the value of a country’s currency. Marginal Revolution University’s course on international finance is an excellent place to start, as are Kimberly Clausing’s book Open and Joseph Stiglitz’s book Globalization and Its Discontents.
Labor economics is the subfield of economics that studies the relationships between workers and employers – when and how people are hired, what the causes of unemployment are, how to increase the wages of workers, and how to make it easier for businesses to find them. Labor economists study questions like the effects of immigration, whether automation does more harm than good, what policies work at reducing workplace discrimination, and how much education matters for someone’s chances of being hired. Some books about labor economics we recommend are A Good Provider Leaves by Jason DeParle, Understanding the Gender Gap by Claudia Goldin, and, for an unusual perspective, the graphic novel Open Borders by Bryan Caplan and Zach Weinersmith.
Macroeconomic policy studies the question of what drives major economic forces like inflation and unemployment, why they fluctuate up and down every few years, and what policies – both through central banks and governments – help employ as many people as possible without prices rising too fast. To learn more about how government spending and central banks work to control inflation while allowing economies to grow, we suggest Tim Harford’s excellent book The Undercover Economist Strikes Back.
Political economics uses economic principles – like the idea that people respond to incentives – to study how politics works, including which voting systems work best, what drives the decisions of dictators, and whether a leader being assassinated and replaced by their successor significantly changes a country’s direction. Some great books about the economics of politics include The Dictator’s Handbook by Bruce Bueno de Mesquita and Alastair Smith and The Myth of the Rational Voter by Bryan Caplan.
Public economics is the study of applying economics to public policy, particularly in areas like criminal justice, education, poverty, housing policy, and health insurance. It is especially concerned with cases where markets fail to provide good outcomes on their own, so governments have to step in. Useful resources on public economics include Abhijit Banerjee and Esther Duflo’s Good Economics for Hard Times and Jennifer Doleac’s podcast on the economics of criminal justice, Probable Causation.
We hope this list excites you about the range of possibilities in economics. We have curated research ideas in economics for high school students. Happy learning!
Stephen is one of the founders of Lumiere and a Harvard College graduate. He founded Lumiere as a PhD student at Harvard Business School. Lumiere is a selective research program where students work 1-1 with a research mentor to develop an independent research paper.
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