I have started to learn economics from Adam Smith's "Wealth of nations" because I think that learning economics (or narrow fields of it) will allow me to become rich.
Does knowing economics allow me to make money?
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You may find the answers to this question useful: http://economics.stackexchange.com/questions/9167/who-were-the-economists-who-made-lots-of-money-in-the-financial-markets/9174 – Giskard Dec 03 '15 at 20:34
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Welcome to Economics.SE! Happy to have you here and we are happy to try and answer questions as you learn about economics (please read guidelines on what makes a good question as you do so though). I second @denesp said. The answers there answer your question better than the question that was asked in the previous question. I will continue to stand by my "law of no arbitrage" is the most important economics concept to learn if you think that economics will make you money ;) – cc7768 Dec 03 '15 at 22:58
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@cc7768 Sorry, I didn't get all of what you wrote. – Alex Velickiy Dec 03 '15 at 23:43
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Sorry. It was kind of an overload of thoughts at once, but there were three distinct things I wanted to say. 1) Welcome to Economics.SE. We are happy to answer questions and invite you to read our guidelines about what types of questions should be asked/answered here. 2) The answers to the question that denesp linked to should be relevant to what you are asking. 3) The most important lesson to learn in economics if you think that knowing economics can make you money is the law of no arbitrage. – cc7768 Dec 04 '15 at 00:36
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@cc7768 I read the article https://en.wikipedia.org/wiki/Arbitrage that you provided as a reference to "law of no arbitrage" in your another comment and couldn't find any information about this law there. – Alex Velickiy Dec 04 '15 at 18:39
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First things first, we must dispel the misconception that you will find in economics some magic formula to "beating the stock market" or some other way to make easy money. I explain why why here.
Learning economics can help you to become more wealthy in several prosaic ways:
In the same way that learning to be a doctor or lawyer can make you rich. If you have useful skills then people will pay you to use your skills to help them. Professional economists are employed in the government, academia, and the private sector and are generally well-paid.
Learning economics will also teach you to be a more logical and systematic thinker, which is likely to make you better at all kinds of intellectual tasks—including those not directly connected to economics. Again, this is likely to improve your future earnings potential.
Many ordinary people do truly stupid things with their money. Economics will not generally teach you about these things (better to read about personal finance, as Arthur Tarasov suggested), but it will teach you to be more savvy in matters of money and help you to avoid the pitfalls.
Note that none of these three things are specific to economics. You would do just as well to learn medicine and read a beginner's guide to investing. Some advice in my capacity as an 'old guy' rather than an economist: if you want to become rich then find a career that pays good money and that you will enjoy and work hard at it.
Final remark: If you really want to learn economics then reading Adam Smith is probably a pretty bad way to start. That is like trying to learn English by reading Shakespeare. Much better to start with a modern introduction to the subject (I am fond of "Intermediate Microeconomics: A Modern Approach" by Hal Varian).
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Well, I didn't expect to see magic formula in economics books, I just thought that understanding of principles of how money and commodities move and how and by what ways they are accumulated in one hands, it will give me an idea of some most efficient ways to become rich. Different ways than just be a good worker. And I stared from Adam Smith because I thought it would be better for deep understanding to start from the beginning of economic theory and moving slightly to modern ones. – Alex Velickiy Dec 04 '15 at 18:47
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By the way what do you think about launching own business or starting startup? – Alex Velickiy Dec 04 '15 at 18:49
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Just read your answer on question you provided. As I wrote, I don't expect to find formula and distinct steps to become rich. Suppose you want to find out better way to manage some object. Let's assume that for doing that you need find solution of some differential equation. Without maths background, you'd probable wouldn't be able to do this. Furthermore, you'd probable couldn't make up this equation. So I thought that learning economics and understanding something about world of money would render me able to make up "formula" or "equation" of how to become rich and to solve it. – Alex Velickiy Dec 04 '15 at 19:10
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Learning economics can make you richer than you would be without any knowledge of economics whatsoever. So it largely depends on your background. If you were brought up in a financially savvy family and learned all of the basics about personal finance, credit, saving for retirement etc., then reading "Wealth of Nations" won't make much difference. Just work hard and follow conventional wisdom.
If you want to better manage your personal wealth throughout your lifetime, I would suggest reading books and blogs on personal finance. Googling 'Personal Finance' is a good start. Again, economic theory and economic history won't be too helpful.
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Think about the opportunity cost of "learning economics" - this may depend on your age, family situation, alternative actions, etc. You may appreciate the fact that many of the traders and analysts at investment banks are not economists or did not learn economics. But they are some of the richest "economists". Similarly, many rich people, check Forbes for the list, have non-econ background. Learning economics may help improve your life in some way, but if its opportunity cost is high at this time, you better think about business ideas which could help you find an already rich business partner. You get rich along the way then.
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