We Are All Economists and Don’t Know It

Everybody has to make decisions that are shaped by the economy as seen at the time. However, no one realizes that economics is used all the time in daily activities and workplaces. One makes clear economic decisions in the supermarket, while buying houses or SUVs, accepting job offers, in determining which restaurant to eat at or what kind of vacation to take. The actions of small business owners or a cog in a huge corporation have economic implications. The state of the economy also matters while taking economic decisions. When times are good, it is easy to splurge. One feels comfortable about the future and that makes it easier to spend more money; however, it becomes opposite when times are not good. The changeover from high quality to lower quality and priced products is called the substitution effect. When prices rise or incomes fall, the goods that can be afforded are substituted for goods that are no longer affordable. That is precisely what happened during the Great Recession when many households started buying increased amounts of store brand products and other, lower‐cost meats, poultry, and fish. As the economy recovered, shoppers started to “up‐buy” or once again purchase the more expensive name brands and higher‐quality goods.