Essay on Economics of Information

Submitted By steventang2010
Words: 1007
Pages: 5

There have been discussions among scholars in developed countries regarding economics of information. Developed countries includes Australia, New Zealand, United States, Ireland, Germany, Japan, Canada and many more are countries that have a high level of development according to some criteria. The criterion is income per capita; countries with high gross domestic product (GDP) per capita would thus be described as developed countries. Another economic criterion is industrialization; countries in which the tertiary and quaternary sectors of industry dominate would thus be described as developed. More recently another measure, the Human Development Index (HDI), which combines an economic measure, national income, with other measures, indices for life expectancy and education has become prominent. This criterion would define developed countries as those with a very high (HDI) rating.

Birchler and Butler (2007) stated that there are many reasons to know in depth about economics of information, which are information is an interesting economic good, economics is about information, information is of strategic importance and information economics is a young field with practical relevance in many context.

According to Sloman (2003), many people think that economics is about money. Well, to some extent this is true. Economics has a lot to do with money: with how much money people are paid; how much they spend; what is costs to buy various items; how much money firms earn; how much money there is in total in the economy. But despite the large number of areas in which our lives are concerned with money, economics is more than just the study of money. It is concerned with the production of goods and services and the consumption of goods and services. Economics is a social science whereas it examines how individuals or groups behave and interact in markets and involved with mathematical models in order to help the forecast markets and also enable managers and policymakers to make economically efficient decisions. Moreover, economics is also the study of human behavior where the economic models of human behavior is related to assumption that individuals behave rationally in ways they believe give the most net benefit. For example, individual will think and choose either he or she should become a librarian or a doctor? Should he or she purchases a new motorbike or fix the old one? This shows that economics is used to explain human behavior based on the rational choices of individuals acting in their own self-interest.

Economics is defined as the study of the allocation of scarce resources. Economists always assuming that the resources are limited or inadequate but must be allocated to satisfy insatiable wants. Scare resources usually will include library budget, personal income, office space, number of employees, books, digital storage space and also shelf space. Allocating these resources means determining on how to spend the library budget, allocate the office space, divide shelf space among collections of books and so on. Choice must be made about the best use of limited resources. According to Kingma (2001), economics examines how decisions are made and which alternatives provide the greatest benefits to the various stakeholders, people or group with an interest in the decision. Furthermore, economics provides a set of tools to measure costs and benefits, thus enabling managers to come out with better decisions to organization. The tools including demand, supply, costs and also benefits.

Economics of information goods and services are different from other types of goods and services. Managers and policymakers need to have a clear understanding of their differences. For example, information may affect individuals other than who directly consume and manufacture it. Print, digital or broadcast information over radio or television can be shared by many individuals or anyone without decreasing any value of it. The