Limitations of Economics as a Field of Study

Economics assumes people want more goods and services. No matter how many material possessions people have, they seem to want more. Economists have conducted surveys to determine if having more material possessions increases happiness.[ii] These studies conclude that if a family’s basic needs and wants are not being met, then having more income and material possessions does tend to increase happiness. Once a family reaches a certain income level, estimated to be about $50,000 in 2003, additional income and material possessions do not have much effect on happiness.

Occasionally, people talk about things they want that are not material, such as love, enlightenment, or world peace. The importance of these things is often ignored in economic discussions. Some people, such as monks and nuns, renounce material possessions. Introductory economics has a hard time explaining this behavior. Intermediate level microeconomics courses discuss ways to explain it, however.

Most people want a college degree so they can obtain a better job, earn more money, and buy more things. Since most people have an insatiable desire for material possessions, however, it may not be the material possessions that provide people with fulfillment. Although many people think having more material possessions will provide them with happiness, research suggests otherwise. Happiness and fulfillment in life come from other sources, such as family, friends, vocation, hobbies, or spiritual beliefs.