What Is Social Economics?
Social economics is primarily concerned with the interplay between social processes and economic activity within a society. Social economics may attempt to explain how a particular social group or socioeconomic class behaves within a society, including their actions as consumers.
- Social economics is a social science and branch of economics that focuses on the relationship between social behavior and economics.
- Social economists may borrow the tools of other social sciences such as psychology or sociology.
- The theories of social economics often consider factors that are outside the focus of mainstream economics, including the effect of the environment and ecology on consumption and wealth.
- Social economics may attempt to explain how a particular social group or socioeconomic class behaves within a society, including their actions as consumers.
- Social economists may examine the factors and decisions that relate to a person's educational level, health outcomes, or involvement in crime or violence.
Understanding Social Economics
Theories of social economics sometimes diverge from conventional economic theories. They may consider factors that are outside the focus of mainstream economics, including the effect of the environment and ecology on consumption and wealth.
Social economists frequently study the different economic choices by people in different socioeconomic classes. A socioeconomic class is a group of people with similar characteristics. These characteristics can include social and economic standing, level of education, current profession, and ethnic background or heritage.
Different socioeconomic classes may have different priorities regarding how they direct their funds, or they may be unable to afford certain goods or services due to their income limitations. These goods or services can include access to more advanced or complete medical care, educational opportunities, and the ability to buy food that meets specific nutritional guidelines.
There are two broad perspectives in social economics. Though opposite in their approach, they can be thought of as complementary. The first, pioneered by Nobelist Gary Becker, applies the basic theoretical and applied tools of neoclassical microeconomics to areas of human behavior that are not traditionally considered part of the economic sciences, such as crime and punishment, drug abuse, marriage, and family decisions.
The second perspective applies the ideas of other social sciences, such as sociology, psychology, and identity group studies to subjects of an economic nature like consumer behavior or labor markets. These practitioners of social economics use history, current events, politics, and other social sciences to predict social trends that could potentially impact the economy. This strand of social economics is the primary focus of this article.
In addition to income, socioeconomic status is also related to factors like education, family structure, occupation, and membership of certain ethnic minority groups.
Impact of Social Economics
According to the American Psychological Association, socioeconomic factors may reveal inequalities surrounding wealth, education, or status. These background factors may play a role in a person's life decisions, such as their career or family choices.
Some of these socioeconomic relationships are explained below:
There are strong correlations between socioeconomic status and family structure, as well as other outcomes such as parenting practices and childhood development. Single-parent households are more likely to be low-income, and low-income households are more likely to suffer from domestic violence and child neglect. These disparities also manifest in worse health outcomes later in life.
Children with lower socioeconomic status tend to enter school with lower levels of reading and linguistic development, as well as lower social skills. In later years, these deficiencies may manifest themselves in lower levels of academic success and, ultimately, in lower incomes when they reach adulthood.
Ethnic and Minority Status
There are strong correlations between socioeconomic status and membership in indigenous or other ethnic minorities, particularly those that have historically suffered from discrimination. Membership of some minority groups may correlate to higher levels of unemployment or substance abuse, as well as poorer mental and physical health.
Although interpersonal violence can occur at any socioeconomic level, people from lower socioeconomic backgrounds tend to have greater exposure to violence, especially in their formative years. Exposure to violence can negatively affect a person's academic and employment outcomes, and domestic violence is also a major cause of homelessness.
Example of Social Economics
An individual’s socioeconomic status can significantly impact their educational attainment and financial security. An individual from an affluent social class will likely have a greater opportunity to achieve higher education and may be expected to pursue such a goal, while those from low-income families generally do not have the same opportunities available to them.
For example, low-income families may not be able to pay for their children's participation in team sports, music lessons, or private tutoring, which can propel them toward achieving a prosperous future (as well as provide them with growing confidence to take on more challenges). Also, these children may attend overcrowded schools where education is underfunded or understaffed.
Completing higher education is more likely to increase their income potential, as well as provide opportunities to interact with people of similar or more advanced social standing and build beneficial social networks.
In contrast, higher education may not be attainable for an individual existing at or below the poverty level. Many studies have revealed that young children from families existing at or below the poverty level develop academic skills slower than children from affluent social classes. A lower socioeconomic status is also related to poor cognitive development, language, memory, socioemotional processing, and consequently poor income and health in adulthood.
What's more, school systems in communities that are primarily populated by those at or below the poverty level are often underresourced, which negatively impacts students’ academic progress and outcomes. Poor academic skills and progress, combined with high dropout rates, can impact children’s academic achievement in the long term.
What Are Examples of Socioeconomic Factors?
In addition to income, socioeconomic status also includes other factors such as educational levels, financial security, environmental factors, and subjective perceptions of social status and class.
What Is Socioeconomic Well Being?
Socioeconomic well-being means the mix of social and economic factors that produce the best outcomes for a person's health and well-being. Although a high income is not strictly necessary, a sufficient level of financial security is a significant factor in mental and physical health as well as educational outcomes.
How Do You Calculate Socioeconomic Status?
There are three key measures for determining someone's socioeconomic status, according to the National Committee on Vital and Health Statistics: income, education, and occupation. In addition, the American Psychological Association also recommends considerations of family size, since the number of earners and dependents in a household has a strong impact on the family's financial security. One may also consider subjective factors, such as occupational prestige or a person's subjective perceptions of social class.
What Income Is Considered Low Socioeconomic Status?
Although income is not the only element in someone's sociological status, it is an important measure of a person's ability to obtain better health and educational outcomes. In the United States, the Department of Housing and Urban Development (HUD) gauges income levels as a percentage of the Area Median Income (AMI). A family earning less than 80% of the AMI is considered low-income, and a family earning less than 50% of the AMI is considered Very Low Income. These categories are used to allocate housing vouchers and other assistance.