1. Introduction to Economics
DEFINITIONS OF ECONOMICS AND SOCIAL SCIENCE
One modern definition of Economics is;
The scientific study of the choices made by individuals and societies in
regard to the alternative uses of scarce resources which are employed to
This suggests that there is a lack of things in the world, clean-water, food, houses, roads, hotels,
cars and so on. Humans devise systems to share out these scarce resources between themselves.
Economists are interested in describing these systems and finding the best methods.
It might be argued that there is enough food, water, shelter, warmth and clothing to satisfy the
world population. But, needs and wants are not the same thing and economists point out that
even the richest people in the world still want more.
Another definition is
Economics is what Economists do.
John Maynard Keynes
described what he thought economists do in
Essays in Biography
economist, he wrote, must
possess a rare combination of gifts. He must be
mathematician, historian, statesman, philosopher-in some degree. He must
understand symbols and speak in words. He must contemplate the particular in terms
off the general, and touch abstract and concrete in the same flight of thought. He
must study the present in light of the past for purposes of the future. No part of
man's nature or his institutions must lie entirely outside his regard. He must be
purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an
artist, yet sometimes as near the earth as a politician.
Here is another view.
There appear to
methods by which economic phenomena may be
investigated, and each of them has its vigorous champions. The first
consists mainly in deductive analysis. Proceeding from a few simple
premises based upon general observation to broad generalizations. The
second is the historical method, which seeks an understanding of existing
institutions by tracing their evolutions from their origins in the past. The
third is statistical induction, which endeavours, by the analysis of numerical
data, to develop quantitative knowledge of economic phenomena. Luckily,
the disputes which have been waged between the advocates of these
different types of analysis do not have to be settled before economics can
be defined, for the question of definition is one of subject matter rather,
than of method. Anyway, it is now coming to be recognized that these
methods are complementary rather than mutually exclusive.
Raymond T Bye, The Scope of Economics, Journal of Political Economy, 1939