Introduction

Most of economics can be summarized in four words: People respond to incentives. The rest is commentary.

Steven E. Landsburg

My view of economics is that it is the study of the economic system, that it studies how people earn their incomes and how they spend them, and that it studies the institutions of the economic system, that is to say, banks, markets, and firms, all influenced ... by the legal system.

Ronald Coase

Economics is a study of mankind in the ordinary business of life.

Alfred Marshall

Economics is the science which studies human behavior as a relationship between scarce means which have alternative uses.

Lionel C. Robbins

Economics is what economists do.

Jacob Viner

What is Economics?

Economics is the study of how societies allocate scarce resources among competing uses. It is about the choices made by people, individually and collectively, in the production, exchange, distribution of goods and services. Central to economic analysis is the study of how people respond to incentives in a market economy, how these incentives may be modified by government intervention, and whether and how government intervention is warranted. At Canterbury, emphasis is placed on the three core areas of study. These are:

• Microeconomics examines the behaviour of individuals, households and firms, and their interactions in markets. Microeconomics examines economic choices in decentralised markets and reaches conclusions about economic welfare. Markets which are regulated by government, or have only a few participants, or are characterized by different amounts of information, are also examined.
• Macroeconomics examines the performance of an economy as a whole, and provides insights into the reasons for fluctuations and trends in national income, unemployment, inflation, interest rates, and exchange rates. It also involves examination of a government's taxation, expenditure, monetary and exchange rate policies.
• Econometrics brings economic theories to the data. It is the study of methods aimed at i) testing economic theories and ii) providing quantitative information on economic relationships for policy analyses and decisions. Courses provide both an accessible account of available econometric methods, and numerous illustrations of these methods with applications to real data sets in "hands on" laboratory classes that introduce students to the latest developments in computing and web technology.

What is Finance?

Finance is the study of savings, investment and risk. It describes the ways in which individuals form, or should form, investment portfolios; the ways in which firms make, or should make investment decisions, and how they can best pay for these investments; and the ways in which markets, institutions, regulators and governments facilitate these decisions. As in economics, incentives play a pivotal role, but with the added dimension that responses have uncertain and long-reaching consequences. Finance draws heavily on the tools of mathematics, statistics (including probability), and accounting, as well as economics and econometrics. At Canterbury, emphasis is placed on the three core areas of finance. These are:

• Corporate Finance focuses on the financial decisions of the business firm. Topics include the cost of investment capital, the impact on firm value of managerial decisions about investment, and the methods used to pay for these investments.
• Investments is the application of scientific tools to personal investment decisions. Topics include the ways in which assets and securities can best be combined for individual investors, how these instruments are priced by markets, and how their performance can be measured.
• Financial Institutions and Markets describes the role of banks, regulators and other institutions intrinsic to the financial system, explains the ways in which financial markets operate, and analyses the determination of interest rates.

Both Economics and Finance are about decisions and decision-makers, consumers, employers, investors and policy-makers in government agencies and industry. The objective of both disciplines is to help decision-makers make better decisions. By studying economics or finance (either as your major or simply as part of your degree) you may have the chance to have an important impact on the well-being of many people - and there is also the possibility of earning a good living yourself.

You can choose to major in economics or finance (or both), but even if you don't, including some courses in your degree will equip you with some valuable critical thinking and analytical skills that will enhance your understanding of the world we live in.

The department has an establishment of 24 academic staff, and papers are offered at stages 1, 2 and 3 as part of the B.Com, B.A. or B.Sc. degrees, together with postgraduate papers for the B.Com.(Hons.), M.Com., B.A.(Hons), M.A. and B.Sc.(Hons) 400 level courses.

The Graduate Diploma in Economics (Grad.Dip.Econ.) is offered as a transitional route in economics for graduates from other disciplines.