Social Economics

What is social economics?

Social economics, also known as socioeconomics, is the study of the intersection of social behavior and economic factors. In other words, it shows how social and economic structures can influence people’s choices, habits, and lifestyles.

An interdisciplinary study, social economics analyzes past political, sociological, and economic patterns to predict future trends, including consumer habits. A person’s socioeconomic status (SES) affects where they can afford to live, their opportunities for education, and their overall quality of life.

Demand planning software has forecasting tools to help businesses predict and plan for shifts in consumer spending. These tools use machine learning technology to automate planning and facilitate decision making that can be part of the social economics of their customer base.

Basic elements of social economics

Social economics studies the convergence of social and economic forces. A person’s socioeconomic status or relative standing in a hierarchical society is based on the following three factors:

• Education: While some people have the opportunity to complete college or postgraduate studies, others may drop out of high school to watch younger siblings or get a job. Similarly, only some children have access to preschool due to cost or the proximity of programs. Education affects employment and income later in life.
• Employment: Employment levels vary in society. For instance, some individuals may struggle to hold a job due to illness or transportation. Others may have occupations requiring extra years of schooling, such as an anesthesiologist or corporate attorney. 
• Income: Income is complicated to measure and compare since it can mean more than just salary and wages. The definition of income can expand to include other streams, like capital gains, employer contributions to healthcare, or Social Security. Income varies between households, and the perception of income levels depends on the regional cost of living. 

These three components interconnect to form the complex construct that is SES. Typically, people refer to SES levels in three groups: low, middle, and high. 

Individuals may perceive their social standing in their group as different from their objective SES level. This perception is called Subjective Social Status (SSS).

Impact of social economics

Social economics studies the wide-reaching impact of social behavior and economics. Beyond consumer trends, social economics affects the following areas: 

• Health: SES impacts an individual’s physical and mental health. Individuals with higher levels of education and more social support have been found to have better health outcomes. Also, a person’s occupation directly affects their stress level, likelihood of job burnout, and for some workers, their safety. A logger or roofer has a higher risk of occupational injury or death than a graphic designer.
• Violence: Violence exists at all levels of society. However, young people from low SES groups often have more adverse childhood experiences (ACEs), such as abuse, neglect, or household dysfunction. 
• Education: A child’s SES has a lasting impact on their educational achievement. Studies have found that children from low SES households start school with poorer language skills than their classmates. Children living in poverty also miss more school.