What is 'Social Economics'?

Social economics is a branch of economics that focuses on the relationship between social behavior and economics. It examines how social norms, ethics and other social philosophies influence consumer behavior and shape an economy, and uses history, politics and other social sciences to predict potential results from changes to society or the economy.

Social economic theories do not move in lockstep with those of orthodox schools of economics. Therefore, traditional schools of thought often assume that actors are self-interested and make rational decisions. Social economic theories often consider subject matter outside the focus of mainstream economics including the effect of the environment and ecology on consumption and wealth.

BREAKING DOWN 'Social Economics'

Social economics, also referred to as socioeconomics, is concerned with the relationship between social and economic factors within a society. These are factors that influence how a particular group, or socioeconomic class, behave within society including their actions as consumers. Different socioeconomic classes may have varying priorities regarding how they direct their funds.

There may also be certain goods or services that are considered unavailable to certain classes based on their ability to afford them and their income. These goods or services can include access to more advanced or complete medical care, educational opportunities, and the ability to buy food that meets certain nutritional guidelines.

Socioeconomic Class

A socioeconomic class is defined as a group of people with similar characteristics. These characteristics can include social and economic standing and other factors such as the level of education, current profession, ethnic background or heritage, and other ways that individuals can be categorized.

Impact of Socioeconomic Status

An individual’s socioeconomic status shapes the beliefs and attitudes a person holds. This can include perceptions of available opportunities and beliefs on life directions. For example, an individual from a more affluent social class will likely have more opportunity to achieve a higher education and may be expected to pursue such a goal by peers and other members of their class. Pursuing a higher education is likely to lead to a higher-paying job and that individual will interact with society and build networks associated with their social status.

In contrast, an individual considered to be existing at the poverty may hold the false belief that higher education is unattainable by any means, and this belief may also be reinforced by the individual's peer group. This can result in fewer and less lucrative employment opportunities and, effectively, restrict that person's interaction and standing within society.

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