Social Economics 

A social science and branch of economics that focuses on the interrelationship between economic activity and social behavior

What is Social Economics?

Social economics, also known as socioeconomics, is the social science and branch of economics that studies the interrelation between economic activity and social behavior. Social economics analyzes how the economy is affected by social norms, ethics, sentiments, and other factors.

 

Social Economics 

 

Summary

  • Social economics is a social science and branch of economics that focuses on the interrelationship between economic activity and social behavior.
  • Social economics attempts to explain how members of certain socioeconomic classes act and how the economy is impacted.
  • Social economics draws upon information from fields such as history, philosophy, sociology, and political science. It uses information from different areas to examine how it influences consumer behavior, shapes buying trends, and affect other activities within business and economics.

 

Understanding Social Economics

Social economics attempts to explain how social factors impact economic activity in society by drawing upon information from fields such as history, philosophy, sociology, and political science. It uses information from different areas to examine how it influences consumer behavior, shapes buying trends, and affect other activities within business and economics.

It is interesting to note that social economic theories are somewhat unorthodox with regards to considering factors that are not usually focused on in traditional or mainstream economics, such as environmental effects on wealth and consumption behavior in society.

 

Fields Influencing Social Economics

 

Social Economics and Social Classes

Social economics relies heavily on theories of sociology to explain how members of different socioeconomic classes may adopt different priorities when making financial decisions for them and their families. Socioeconomic classes refer to groups of people with a similar social standing in society, which is heavily influenced by factors such as education, income, profession, and family background – such as the education and income level of parents and other relatives.

With our society becoming increasingly diverse and globalized, factors such as ethnicity and heritage also play a significant role in affecting socioeconomic classes since members of visible minorities and other disadvantaged groups historically faced barriers to education and certain professions in comparison to their Caucasian counterparts.

Going back to more foundational factors, some socioeconomic classes also face barriers to purchasing some goods or services, as they are unable to afford them as a result of lower income. The goods or services may include advanced medical care, healthy and nutritious food, or finding a safe and comfortable living environment.

 

Significance and Impact of Social Economics

Social economics certainly exerts a profound impact on the lives of individuals, and their socioeconomic status may strongly influence their future achievements, level of education, and degree of financial security. For example, someone coming from a wealthy household in the upper or upper-middle classes would likely face more opportunities. They will be able to afford higher degrees or education while enriching their experiences with study abroad programs or frequently traveling to explore foreign places and cultures.

They will also be more likely to do so due to the similar achievements of their peers of similar socioeconomic backgrounds, as well as pressure from families and other members of their social class. The completion of higher education – such as undergraduate and graduate degrees – is strongly linked to an increase in income and eligibility for positions in senior management. It also enables more opportunities to interact with others of similar social standing and build social networks to include those of the same or more advanced social classes.

Indeed, according to studies, children born to university-educated parents enjoy a much higher chance of success in school and are more likely to obtain the high grades needed for higher education in post-secondary and beyond. Individuals with highly educated parents also are more likely to enroll at top-performing schools with better teaching staff and resources.

Based on other studies, university-educated parents are more likely to place a high value on educational achievement and instill in their children the importance of achievement-oriented behaviors and opportunities – such as obtaining advanced degrees, reading and writing often to develop strong skill sets, and partaking in after-school activities and extracurricular programs to enrich their breadth and depth of experiences. It, in turn, leads to a stronger belief in the benefit of pursuing higher learning, which leads to more successful careers and a wider range of job opportunities.

In comparison, individuals whose parents did not hold university degrees were more likely to believe that post-secondary education was not worth the cost, and it would be more beneficial to enter the workforce straight out of high school. Such a mindset is perhaps further exasperated by the lack of an education role model in their adolescence and less support, both financial and emotional, to pursue post-secondary studies after high school.

 

More Resources

CFI is the official provider of the global Certified Banking & Credit Analyst (CBCA)™ certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional resources below will be useful:

  • Business Ethics
  • Decision Analysis (DA)
  • Buyer Types
  • Environmental Economics

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