Branches of Economic 2026
Branches of Economic Economics is often described as the study of scarcity—the fundamental problem that human wants exceed the resources available to satisfy them. This pervasive reality forces individuals, businesses, and societies to make choices. Economics, therefore, is the social science that analyzes the production, distribution, and consumption of goods and services. To navigate the immense complexity of modern economies, the discipline has evolved into a structured tree of specialized branches, each offering a unique lens through which to understand choice, incentive, and outcome. This article maps the core and extended branches of economics, providing a comprehensive overview of this vital field. The Foundational Dichotomy: Microeconomics and Macroeconomics The most fundamental split in economics is between microeconomics and macroeconomics, distinguished primarily by their scale and focus. 1. Microeconomics: The Lens of the Individual Microeconomics zooms in on the behavior and interactions of individual economic agents—the atoms of the economic universe.…
The Sunk Cost Fallacy
In the 1960s, the British and French governments jointly developed the Concorde supersonic jet—a revolutionary but economically doomed project. Despite knowing the aircraft would never be profitable, both governments continued pouring billions into development. When questioned, officials famously responded, “We cannot stop now, after having already spent so much.” This perfect example of the sunk cost fallacy demonstrates our powerful tendency to continue investing in losing propositions simply because we’ve already invested significant resources. From failed relationships to money-losing business projects, this cognitive trap costs individuals and organizations billions annually while causing immense emotional distress. What Exactly is the Sunk Cost Fallacy? The sunk cost fallacy occurs when we consider irrecoverable past investments when making decisions about the future. These “sunk costs”—whether financial, temporal, or emotional—should theoretically be irrelevant to rational decision-making. Yet psychologically, we find it incredibly difficult to ignore them. Classic Examples Include: Sitting through a terrible movie because “I…