It’s often easy for us to group similar things together in our minds, but we must be careful not to dismiss the distinctions that separate them. People often confuse economics with finance, which is akin to confusing chemistry and physics: while both fields of study work with similar aspects of our world, they are still separate disciplines of thought.
On the Surface
Economics studies the production and distribution of goods, in an attempt to understand how we can continue to ensure that products are able to get to the people at a price that is fair to both the buyer and the seller, often by examining the factors that might disrupt the flow of the economy and what we can do to prevent them. Finance deals specifically with money: how it can be earned, how it can be spent, and how you can keep a little bit in your pocket.
Basically, if you were to go out and buy a new mustang, economics majors would be focusing on the car and finance majors would be focusing on the cash it took to buy it.
Difference in Branches
Economics is typically split into two different subsets: macroeconomics and microeconomics. Macroeconomics aims to find patterns on a global scale, such as inflation or unemployment. On the other hand, microeconomics looks at distribution of goods, making sure that the supply matches the demand.
Finance branches off into the public, personal, and business sectors. In public finance, the government is examined, particularly how it gets money from its people and how it spends it once it’s been acquired. Personal finance looks at individual situations, often with income and possible loan expenditures. Business finance works with corporations to ensure that they are cutting unnecessary costs and maximizing profit.
Why We Need Them
Those who work in economics maintain the order of things. Their consultation leads to manufacturers creating the goods that people need. Not only does their work affect corporations, economists are also responsible for the growth and maintenance of government. They can help to determine how much to tax individuals and how much to regulate businesses and all of those other decisions that your father likes to complain about.
Finance comes in and puts these decisions into action. These are the people who advise businesses and individuals where to invest their money. They’re the ones who are able to predict what will happen with the stock market, so people listen to them.
Putting it into Action
Economists are normally able to find jobs in the private sector, often with corporations or governments. Those who work in finance typically work on a smaller scale with individuals. Although they would each argue that they are more important for the state of our country, our wellbeing is made possible only by their respectful relationship.
