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Economics is an  attempt to understand the  processes  that govern  the  production, distribution  and consumption of wealthIts ability to do so is limited by two important characteristics of those processes:
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* their complexity and variety are often too great to permit anything approaching a comprehensive description;
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* they are governed by the behaviour of  differently-informed individuals with different motives.  
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<font face="Gill Sans MT">
This is a 'portal' article that is intended to serve as a reference point for economics graduates and undergraduate students, and for graduate-level laymen who are readers of economics articles in the media. It provides in-text links (blue font) to the available economics articles.<br>
Access to the  articles is also provided by a [[/Addendum|'''taxonomic index''']] of  articles, and an [[/Related Articles|'''alphabetical index''']], of both articles and  topics within the articles.<br>
Definitions of the terms used in the articles are provided in the [[/Glossary|'''glossary subpage''']].<br>
Prospective contributors to economics articles are invited to start by visiting the '''[[CZ:Economics Workgroup]]''' page.</font>
|}''
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Economics uses the methods of the physical sciences, adapted to those characteristics. It is classified as a science on the grounds that it aims to produce testable propositions.
The term '''economics'''  refers both to an intellectual discipline and to a profession.  


==The methodology of economics==
The intellectual discipline of economics is an attempt to gain an  understanding of the processes that govern the production, distribution and consumption of [[wealth (economics)|wealth]], and to use that understanding to assist in the prediction of the consequences of economic activities. It uses the methodology of [[science]] and can be considered to be a science insofar as it produces testable propositions (see [[/Tutorials#Economics as a science|economics as a science]]), although some branches of the subject are widely considered to be normative (see [[/Tutorials#Normative economics|normative economics]]). Like other sciences, it is subject to a continuing process of revision.
Complex economic processes  are  analysed by mentally replacing  them with  simplified representations  (referred to as a ''models'').  The assumptions embodied in those models determine how well their behaviour mirrors the processes they are  intended to representIt is sometimes possible to adopt self-evident propositions (or axioms), and proceed successfully  by deduction from those axioms.  When  axioms are not available - as is often the case -  an inductive procedure has to be used. One possibility is to use  assumptions that have been tested against observed data.  Another is to  use untested assumptions,  and replace them  if  the model’s behaviour fails to mirror reality.


Among the assumptions embodied in an economic model are assumptions about human behaviour. It is commonly assumed that everyone is equally well-informed and everyone acts rationally. As a generalisation, that is obviously untrue, but its adoption does not necessarily make a model unrealistic. The process under investigation may behave “as if” it were true. The difficulty of making an acceptable assumption about human behaviour may nevertheless limit what can be achieved. Economists of the ''Austrian School'' are sceptical about the possibility of overcoming that difficulty and tend to reject the model- building procedure, but the mainstream of economic theory operates on the assumption that that difficulty  is not decisive.
The profession of economics includes academics<ref>For a light-hearted look at the life of an academic economist, see Axel Leijonhufvud's ''Life among the Econs''[http://www.kysq.org/diss/LifeamongtheEcon.pdf]</ref>  who construct, develop and teach economic theoryand practitioners who use economic theory to make forecasts or to advise upon political, commercial and regulatory decisions. Its most influential application is to the management of the economy. Mistaken decisions in that context can do more damage than in most others.


==The categories of economics==
==Economic Theory==
The techniques of economics have been applied to many different activities, leading to the development of a wide range of sub-disciplines under the headings of ''the economics of …''(Links to articles on some of those sub-disciplines are listed in the ''See Also'' paragraph below.) However, the principal categories of economics that are of interest to the general reader are microeconomics, macroeconomics, welfare economics and international economics.
===The methodology of economics===
The traditional methodology of economics has been first to formulate a theory, and then to examine how far it provides  operationally useful conclusions. Its pioneers have often adopted an  [[instrumentalism|instrumentalist]] approach:  basing a theory on arbitrary axioms - such as consistently rational human behaviour - and then advocating its acceptance solely  on the grounds that it had  provided operationally useful results. That methodology has  proved to be vulnerable to changing conditions, however, and there has recently been a tendency to move away  from an exclusively axiom-based  approach  towards a greater recognition of observed behaviourAmong the techniques that have been coming into use for that purpose are those of [[Philosophy of economics#Behavioural economics|behavioural economics]] and [[neuroeconomics]].


*'''[[Microeconomics]]''' is about the use of  the resources of land, capital and labour, their allocation to the production of particular goods and services, their relative pricesand how they are distributed among consumers. It examines those issues by considering transactions between consumers and producers, acting singly or in groups. Many of its theorems were developed by deductive reasoning in the late nineteenth century and have since become consensual.
===Economists' tools===
Economists normally combine the use of a range of concepts - such as [[utility]], [[economic equilibrium |equilibrium]], [[supply and demand]], and [[opportunity cost]] - with quantitative observations including [[economic statistics]] and other survey-based data, using the techniques of [[applied statistics#Statistical inference|statistical inference]], [[mathematics#Applied mathematics|applied mathematics]] and [[econometrics]]. Since the use of that combination of tools does not provide an explanation of some observed occurrences such as [[herding (banking)|herding]], [[asset price bubble]]s, [[risk aversion]] or [[panic (banking)|banking panics]], it has recently been augmented by experiments on human behaviour in contrived situations, including those of [[behavioural economics]], [[neuroeconomics]] and [[prospect theory]].


*'''[[Macroeconomics]]'''  is about such economy-wide quantities as national income, the general level of prices, and the unemployment rate. It treats the economy as a single interactive system. It uses an essentially inductive methodology but is often presented in deductive terms in economics textbooks. It is a twentieth-century development that has had a major influence upon the history of that century. Many of its theorems are considered to be controversial, and the subject is still under development.
===The categories of economic theory===
The techniques of economics have been applied to many different activities, leading to the development of a wide range of sub-disciplines. However, the principal categories of economics that are of interest to the general reader are microeconomics, macroeconomics, welfare economics, financial economics, and international economics.


*'''[[Welfare economics]]''' is about the impact of decisions upon the economic well-being of those affected. It provides the theoretical basis for the practice of cost/benefit analysis. Its methodology is the same as that of microeconomics and most of its theorems are uncontroversial.
====Main disciplines====
*'''[[Microeconomics]]''' is about the use of  the resources of [[land]], [[capital]] and [[labour (economy)|labour]], their allocation to the production of particular [[goods (economics)|goods]] and [[services (economics)|services]], their relative prices,  and how they are distributed among consumers. It examines those issues by considering transactions between consumers and producers, acting singly or in groups. Many of its theorems were developed by [[deduction|deductive inference]] in the late nineteenth and early twentieth centuries and most of them are now considered by economists to be uncontroversial.


*'''[[International economics]]''' is about such matters as import restrictions, exchange rate regimes, internationa capital flows and the impact of trade policies upon developing countries. Its theorems are widely accepted among professional economists but have been hotly contested by others.
*'''[[Welfare economics]]''' is about the impact of decisions upon the economic well-being of those affected. Its theorems concerning  the measurement and comparison of welfare provide the theoretical basis for the practice of [[cost-benefit analysis]]. Its methodology is derived from that of microeconomics,  using formally-defined axioms that are often remote from observed circumstances.


==The uses of economics==
*'''[[Macroeconomics]]'''  is about such economy-wide quantities as [[gross domestic product|national income]], [[inflation]] and  [[unemployment]]. It examines the behaviour of the [[economy]] as a  [[complex interactive system]]. It is a twentieth-century development that has had a major influence upon [[fiscal policy]], and [[monetary policy]]. Many of its theorems are considered to be controversial, and the subject is still under development.


'''==See also==''' [[Economic models]], [[economic history]], [[The history of economic thought]]
*'''[[Financial economics]]''' treats the [[financial system]] as a [[complex interactive system]] dealing both in claims upon future [[goods (economics)|goods]] and [[services (economics)|services]], and in the allocation of the risks that are associated with such claims. It is concerned with the [[Financial economics#The choices facing investors|decisions made by investors]], [[Financial economics#The financing choices facing corporations| corporations]], [[Financial economics#The problems  facing the financial intermediaries|financial institutions]], and with the [[financial regulation|regulation]] of those institutions. The practical usefulness of some of its theorems has been questioned following the [[Great Recession]] and previously accepted [[Financial regulation|regulatory policies]] are under review.


==References==
*'''[[International economics]]''' is about such matters as [[tariff]]s, [[International economics#Exchange rates and  capital mobility|exchange rates and international capital flows]] and the effects of [[International economics#Trade policies|trade policy]]. Its methodology was initially derived in the nineteenth century from the methodology  of microeconomics, but it now has much in common with that of macroeconomics. Its principal theorems are widely accepted among professional economists but have been hotly contested by others.


====Sub-disciplines====
The sub-disciplines of economics combine one or more of its main disciplines with the disciplines of other fields. They include agricultural economics, demographic economics, development economics, energy economics, environmental economics, health economics, labour economics, industrial economics, regulatory economics and  transport economics. They typically involve the application of cost-benefit analysis and of the above-mentioned economists' tools to the assessment of alternative policies and practices. Some sub-disciplines draw upon a wider range of economics disciplines: for example, development economics - which is the economic assessment of policies toward developing countries - calls also upon macroeconomics and international economics.


==The uses of economics==
{|align="right" cellpadding="10" style="background:lightgray; width:35%; border: 1px solid #aaa; margin:20px; font-size: 92%;"
|''"... although it has its own esoterica known only to initiates, it is at bottom a craft whose value lies primarily in its practical application"''  - Ben Bernanke<ref> Speech by Ben Bernanke At the 2009 Commencement of the Boston College School of Law, Newton, Massachusetts May 22, 2009 [http://www.federalreserve.gov/newsevents/speech/bernanke20090522a.htm]</ref>
|}
Economics makes its own contribution to the sum of [[science|scientific knowledge]] and it makes  particular contributions to the understanding of the subjects of  [[history]], [[geography]], and  [[politics]].  Its findings are  essential to the practice of business [[management]],  [[financial management]],  [[accounting]] and  [[commercial law]]. They are also essential to the practice of national economic management, for the purpose of which economic forecasters use computerised  [[economic model|models]] based upon observed behaviour, as reflected in [[economic statistics]] and surveys.


==The practice of economics==
{|align="right" cellpadding="10" style="background:lightgray; width:35%; border: 1px solid #aaa; margin:20px; font-size: 92%;"
| ''"Economics is a difficult and technical subject,  but nobody will believe it"'' -  J M Keynes
|}


[[Category:CZ Live]]
The  services provided by practitioners of economics include  economic forecasting,  advice to company executives concerning the consequences for sales and profits of alternative courses of action, advice to investors concerning the  performance of particular markets, advice to regulatory
[[Category:Economics Workgroup]]
authorities concerning the impact of regulations upon the economy,  and advice to governments
concerning the effects of alternative policy actions upon  [[economic efficiency]], [[inflation]], output and [[fiscal stability]]
Unlike most other sciences, economics is often  the subject of  strongly-held opinions by laymen, and one of the functions of  economists is to counter damaging popular fallacies <ref> Alan Budd "What do Economists Know?" in ''World Economics'' Vol 5 Number 3 September 2004[http://www.world-economics-journal.com/Contents/ArticleOverview.aspx?ID=177] (Subscription required)</ref> <ref>David Henderson ''Innocence and Design:  The Influence of Economic Ideas on Policy'' 1985 Reith Lecture Basil Blackwell 1986</ref>.
 
==References==
{{reflist|2}}[[Category:Suggestion Bot Tag]]

Latest revision as of 07:00, 10 August 2024

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This is a 'portal' article that is intended to serve as a reference point for economics graduates and undergraduate students, and for graduate-level laymen who are readers of economics articles in the media. It provides in-text links (blue font) to the available economics articles.
Access to the articles is also provided by a taxonomic index of articles, and an alphabetical index, of both articles and topics within the articles.
Definitions of the terms used in the articles are provided in the glossary subpage.
Prospective contributors to economics articles are invited to start by visiting the CZ:Economics Workgroup page.

The term economics refers both to an intellectual discipline and to a profession.

The intellectual discipline of economics is an attempt to gain an understanding of the processes that govern the production, distribution and consumption of wealth, and to use that understanding to assist in the prediction of the consequences of economic activities. It uses the methodology of science and can be considered to be a science insofar as it produces testable propositions (see economics as a science), although some branches of the subject are widely considered to be normative (see normative economics). Like other sciences, it is subject to a continuing process of revision.

The profession of economics includes academics[1] who construct, develop and teach economic theory, and practitioners who use economic theory to make forecasts or to advise upon political, commercial and regulatory decisions. Its most influential application is to the management of the economy. Mistaken decisions in that context can do more damage than in most others.

Economic Theory

The methodology of economics

The traditional methodology of economics has been first to formulate a theory, and then to examine how far it provides operationally useful conclusions. Its pioneers have often adopted an instrumentalist approach: basing a theory on arbitrary axioms - such as consistently rational human behaviour - and then advocating its acceptance solely on the grounds that it had provided operationally useful results. That methodology has proved to be vulnerable to changing conditions, however, and there has recently been a tendency to move away from an exclusively axiom-based approach towards a greater recognition of observed behaviour. Among the techniques that have been coming into use for that purpose are those of behavioural economics and neuroeconomics.

Economists' tools

Economists normally combine the use of a range of concepts - such as utility, equilibrium, supply and demand, and opportunity cost - with quantitative observations including economic statistics and other survey-based data, using the techniques of statistical inference, applied mathematics and econometrics. Since the use of that combination of tools does not provide an explanation of some observed occurrences such as herding, asset price bubbles, risk aversion or banking panics, it has recently been augmented by experiments on human behaviour in contrived situations, including those of behavioural economics, neuroeconomics and prospect theory.

The categories of economic theory

The techniques of economics have been applied to many different activities, leading to the development of a wide range of sub-disciplines. However, the principal categories of economics that are of interest to the general reader are microeconomics, macroeconomics, welfare economics, financial economics, and international economics.

Main disciplines

  • Microeconomics is about the use of the resources of land, capital and labour, their allocation to the production of particular goods and services, their relative prices, and how they are distributed among consumers. It examines those issues by considering transactions between consumers and producers, acting singly or in groups. Many of its theorems were developed by deductive inference in the late nineteenth and early twentieth centuries and most of them are now considered by economists to be uncontroversial.
  • Welfare economics is about the impact of decisions upon the economic well-being of those affected. Its theorems concerning the measurement and comparison of welfare provide the theoretical basis for the practice of cost-benefit analysis. Its methodology is derived from that of microeconomics, using formally-defined axioms that are often remote from observed circumstances.

Sub-disciplines

The sub-disciplines of economics combine one or more of its main disciplines with the disciplines of other fields. They include agricultural economics, demographic economics, development economics, energy economics, environmental economics, health economics, labour economics, industrial economics, regulatory economics and transport economics. They typically involve the application of cost-benefit analysis and of the above-mentioned economists' tools to the assessment of alternative policies and practices. Some sub-disciplines draw upon a wider range of economics disciplines: for example, development economics - which is the economic assessment of policies toward developing countries - calls also upon macroeconomics and international economics.

The uses of economics

"... although it has its own esoterica known only to initiates, it is at bottom a craft whose value lies primarily in its practical application" - Ben Bernanke[2]

Economics makes its own contribution to the sum of scientific knowledge and it makes particular contributions to the understanding of the subjects of history, geography, and politics. Its findings are essential to the practice of business management, financial management, accounting and commercial law. They are also essential to the practice of national economic management, for the purpose of which economic forecasters use computerised models based upon observed behaviour, as reflected in economic statistics and surveys.

The practice of economics

"Economics is a difficult and technical subject, but nobody will believe it" - J M Keynes

The services provided by practitioners of economics include economic forecasting, advice to company executives concerning the consequences for sales and profits of alternative courses of action, advice to investors concerning the performance of particular markets, advice to regulatory authorities concerning the impact of regulations upon the economy, and advice to governments concerning the effects of alternative policy actions upon economic efficiency, inflation, output and fiscal stability Unlike most other sciences, economics is often the subject of strongly-held opinions by laymen, and one of the functions of economists is to counter damaging popular fallacies [3] [4].

References

  1. For a light-hearted look at the life of an academic economist, see Axel Leijonhufvud's Life among the Econs[1]
  2. Speech by Ben Bernanke At the 2009 Commencement of the Boston College School of Law, Newton, Massachusetts May 22, 2009 [2]
  3. Alan Budd "What do Economists Know?" in World Economics Vol 5 Number 3 September 2004[3] (Subscription required)
  4. David Henderson Innocence and Design: The Influence of Economic Ideas on Policy 1985 Reith Lecture Basil Blackwell 1986