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Our Credentials for Economic Consultancy

Economic consultancy deals with both local and global issues that affect the decision-making of organization, individuals, interest groups, society, governments and other societal settings. The Aim of economic consultancy is to offer methodology of understanding, structuring and resolving those issues that affect the society from different angles. If you are a local company being affected by global issues e.g. international trade policy in your businesses export destinations, you would like to know which strategies to apply in order to improve the sustainability of your local business.

Economic Expert from the Freiburg School of Economics

Our economic expertise originates from the Albert-Ludwig-University of Freiburg im Breisgau in Germany. At the Faculty of Economics and Behavioral Sciences we graduated with Master (M. Sc.) and Bachelor (B. Sc.) of Science in Economics in 2015 and 2012 respectively.

“Risk Sharing and Mobile money: Economic Impact of Mobile Money Technology in Africa.”

James E. Njoroge (M. Sc. Economics) (2015) Master Thesis at the Institute for Economic Research, Department for International Policy (Supervisor: Prof. Dr. Günther G. Schulze)

Announcements (1) Basics of Economics (7) Behavioral Economics (5) Business Administration (2) Coaching (1) Cooling Systems (1) COVID19 Coronavirus (5) Diversity (1) Econometrics (3) Economic Blog (17) Economic Consultancy (4) Economic Policy (1) Economic Research (1) Economics (3) Economics of Pandemics (5) English (11) Events (1) Financial Accounting (1) Financial Markets (3) Freiburg im Breisgau (3) Global Crises (4) Globalization (8) Health Economics (5) Health risks (1) International Economics (5) Leadership and Management (2) Macroeconomics (7) Markets (5) Microeconomics (5) Personal Finance (1) Public Policy (1) Scientific Writing (2) Social Distancing (1) Technology (1)

Importance of Economics as Science

Economics is the interdisciplinary science of decision-making that aims to explain:

  • The decisions made by economic subjects,
  • Content (what) , process (how), context (where) of decisions made,
  • Interconnections to other fields of study

… etc.

So why is economics such an important science? Human beings (or any organism) are confronted with the need to make decisions and have choices about certain alternatives in their existence or life. Think about the needs you had today and the choices you had to make today. How satisfied were you with your decisions and outcomes? Economics formally describes such social events and settings within normative and positive theoretical models and verifies their real life applicability through empirical analysis.

My inspiration for Economics

Economics is my third field of inspiration after (Aeronautical) Engineering and Architecture, followed by Psychology and Sociology. I enjoy viewing issues from an interdisciplinary perspective and this is what makes Economics interesting. When you start learning economics, you may ask yourself; why some analysis seems to be common sense, but still has to be formalized in an economic model. Economics coexists with other Scientific fields. My encounter with economics started back in my home country, Kenya -where I did my primary and secondary education- before continuing with my Bachelor and Masters degree (full time studies abroad) in Germany. In a practical way, my Mother taught me household economics by endorsing me to manage finances at home at the age of about 10. This means that I learned about budget allocation and expenditure optimization at an early age. It’s a skill that young people should be taught at an early age. I thank my Grandmother for her unforgettable support, patience, faith and guidance throughout my studies in Germany. Without her endurance and sacrifice, I would not have had the opportunity to embark on this journey. We function as a team. My topic for the master thesis “mobile money and risk sharing: social-economic impact of mobile money adoption in Africa” was inspired by her. I wanted to find the roots of generosity, selflessness, charity (issues that shape the coexistence of people of different social environments).

More inspiration

The Economic Concept of Opportunity Costs

The economic concept of opportunity costs is the most fundamental issue of economics as a social science. It explains the decision-making and behavior of economic subjects. Economic subjects are private households, firms, and the government as a public household. While explaining the economic concept of opportunity costs, focus on the question: why do people choose to do, consume, or even spend time and resources on what they do? How do you make your choices and decisions?

Definition of Opportunity Costs

Opportunity costs are defined as costs incurred by a forgone alternative (opportunity). A foregone opportunity can either be the opportunity to incur costs, the opportunity to gain revenues, earn profits or cause losses. Economic subjects constantly get involved in decision-making processes, where choices have to be made. Take the following examples:

  • Example 1: non-monetary opportunity costs – the reason why a student would attend high school (an institution of education) is determined by the opportunity cost incurred if the student would not attend the school e.g. the impression of the parents about their daughter or son. Such opportunity cost are not measurable in monetary units.
  • Examples 2: mental accounting – whenever you act or choose not to act in certain manner, you are weighing alternative options and therefore intrinsically accounting for cost that would be incurred by alternative mode of behavior.
  • Example 3: relative costs – a job-seeker may prefer a job that pays less, but offers a better work-life balance, at the cost of a better paying job under worse work-life balance.
  • Example 4: Specialization and relative cost/benefit advantage – the opportunity cost of Germany producing autos are the cost incurred for not producing other goods that Germany prefers to import from other countries, e.g. Coffee from Kenya.
What are opportunity costs?
What are opportunity costs? (C) Evansonslabs

Literature

The following Literature will help you to expand the spectrum of knowledge in this Field:

  • Varian, H. R. (2020). Intermediate Microeconomics: A modern approach ; media update (Ninth Edition, International Student Edition). New York, London: WW Norton et Co.

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What is Economics?

What is Economics, and how can students define economics as a science? Therefore, our motivation in this article is to find a general definition of economics. In much of economic literature, there is also consensus and conflict on some description of economics as a science. So how do we start? To neatly define economics in lectures, we need a broad view of the term economics.

Consequently, Economics can be defined as an interdisciplinarysocial, and behavioral science. Therefore, economic research focuses on explaining the behavior of decision-makers. Economics also explains the implications of the behavior of the decision-makers that affect society at the microeconomicmacroeconomic, and political levels. Such an analysis of different decision-makers consequently needs an interdisciplinary approach. Decision-makers in economics are in particular private households, firms, and governments. 

Microeconomic level

At the microeconomic level, economics explains the human nature of making both individual rational and irrational decisions, social interactions, and behavior under risk. Individuals, organizations, and governments make allocation and distribution decisions daily, which economic subjects would like to evaluate. Economics derives the rules of determining; how efficient or optimal the decisions of economic subjects are. It, therefore, determines the necessary rules and coordination mechanisms usable in decision-making processes. Some of the coordination mechanisms include market, government, private, entrepreneurial coordination in an economy. An economy is the environmental unit of economic analysis. 

Macroeconomic level

Economics is also an environmental dimension of macro-environment analysis in the PESTEL-Framework in strategy management. Other PESTEL dimensions include the political, social, ecological, technological, and legal environment. At the macroeconomic level, economics discusses the aggregated effect at the level of the whole economy using the six macroeconomic objectives (magic hexagon).

Policy Level

At the political level, economics deals with the implication of economic decisions of different interest groups in an economy and derives policy recommendations to help maximize social welfare. Consumers, entrepreneurial, government interests are not always similar. Employees’ and employers’ political interests also differ. Therefore, economic policies are essential and help in balancing the different interests as well as maximizing the welfare of society.

Economics deals with Rational and Irrational Behavior

Evident in all economic literature is the issue of rational and irrational behavior as the central point of discussion. In economic theory, the economist tries to explain how people should make decisions depending on their goals and restrictions they face. Rational decisions are those decisions that respect the restrictions and goals of an individual, while irrational behavior could e.g. incur either a higher cost (not respecting restrictions) or lower utility (not respecting the goals) as compared to the rational decision. Rational decision is influence by the cost of opportunities.

Economics is about the Maximum and the Minimum Principle

Economists derive two principles of decision-making that drive the process of making decisions within economic subjects. The maximum principle and the minimum principle.

The Maximum Principle

The maximum principle suggests the following: Attain the maximum output with a predefined amount of inputs.

What is economics?
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The Minimum Principle

The minimum principle suggests the following: Utilize the minimum input to attain a predefined amount of output.

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How to research about Economics

Find a detailed definition of Economics in the International Encyclopedia of the Social & Behavioral Science (2001, Pages 4158-4159) via Science Direct.

Understanding the definition of Economics

In order to understand Economics, it is essential to differentiate between decision-making from three different perspectives: private consumption and income decisions, public consumption and revenue generation, entrepreneurial production and supply of goods and services in an economy. As discussed above, economics is the science of rational decision-making. Firstly, economists try to explain how economic subjects make rational decisions, the limitations of rational decision-making, human interactions and their outcomes. Secondly, economists try to capture the limits of rational behavior and explain how decision-making takes place under imperfect environment conditions; e. g. information asymmetries, uncertainty, imbalance in power between decision-makers … etc.

Economic subjects

The concept of economic subjects is the notion of viewing people in an economy as (1) private households, (2) as firms (or organizations) and as (3) the government (also a form of organization). In general, this means that there are three economic subjects;

  • Private Households
  • Firms (private and public organizations)
  • Government (Public household and organization)

What is an Economy?

An economy is the analytical unit of interest for all economic analysis and includes the people, biosphere and all resources available e.g. a political unit (e.g. Germany, China, France, Ghana) or a unit specified by certain characteristics such as a continent, a supranational unit, an international coalition of nations, etc.

Sunset in Freiburg im Breisgau

Enjoying sunset in Freiburg im Breisgau

Watching the sun go down in Freiburg is one of my favorite events. I prefer chasing the sun in evening. This is one of the hotspots. The best way to pick a destination in Freiburg: be spontaneous, meet a friend pick a direction and wherever you will go, you’ll discover a unique place to spend some precious moments.

Follow me on Instagram @ergo_hauptagentur_njoroge and
@evansonslabs_consult_coaching

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