What is Economics?


To understand the problems and scope of a particular science, you have to look at how it is defined. Let’s first go through some definitions.

  • “It is a science of wealth”

                                                (a classical definition )

  • “Economics is the science of scarcity and choice”

                                                        (  professor Robbins )

History of Economics

The word economics is derived from the Latin word “Oikonomos,” which means the management of house affairs. Let’s talk about how all of this started. An ancient economist named professor “Adam Smith” presented all the facts and theories in his book “An inquiry into the nature and causes of wealth.” Here’s where the foundation of econom was laid down by no other than “The father of economics Professor Adam Smith.”

 In Adam Smith’s view, economics can be defined as “A science which discusses the production of wealth, consumption of wealth, distribution of wealth and exchange of wealth.”

 We can put it this way: these four aspects of this field of study. The production, consumption, distribution, and exchange of wealth. Like professor Walrus and F.A. Walker said, “Economics is a science which deals with wealth.”

Objectives Raised Against Economics

 Lots of objectives were raised against the definitions by economists. The reactions were different. The moralists like Carlyle and Ruskin have named it the science of “Mammon Worship” and “Dismal Science.” According to some people, economists couldn’t explain the objective of studying wealth. Some even named it the science of bread and butter because, from their point of view, this science makes people greedy and selfish.

Subheads Of Economics

Microeconomics studies individuals, their decisions, goods and services, the price of goods, etc.

Macroeconomics studies the structures, behavior, and government decision-making for the whole economy.

Economics Is A Study Of Science:

Science is the collection of facts about a particular section of the universe arranged after uncountable research and collective experiments of different units. Economics becomes normative science when it studies the solution to various problems going around in places. As for this, the causes of economic problems are studied and discussed, and their solution is also prepared. Different economists come up with different suggestions to eliminate the backwardness of certain situations, so economics becomes a science in cases like this.

Economics Is A Study Of Art:

Art is activities that are made to obtain particular objectives. Some principles of arts are derived with the help of science, and while acting upon those principles to attain the specific objective, the exact science becomes an art. When economics studies different problems, the study of suggestions is a normative science. This proves that economics is also a normative science. The exact science becomes an art when suggestions are practiced to eliminate the problem.

Thus it is proved that economics is both science and art, and both have to be studied together to eliminate the economic problems in the specific nation.

Kinds Of Economics:

There are three kinds of economics:

  • Descriptive Economics
  • Theoretical Economics
  • Applied Economics
  • Descriptive Economics:

In this kind of economics, the economic facts concerned with specific things like agriculture, communication, transportation, industry, etc., are described as figures. For example, suppose we want to consider the causes and effects of a shortage or a specific thing in a specific place. In that case, we’ll collect the facts and figures about that thing’s production, consumption, and distribution. In other words, in descriptive economics, all related facts about a specific topic are collected to work on.

  • Theoretical Economics:

In this kind of economics, the economic problems and conditions are studied neutrally, and analysis is made about them. This analysis aims to properly understand economic problems or processes of the economy so that limited resources may be used effectively.

Theoretical Economics is further divided into two types:

  • Positive Economics           (2) Normative Economics

But right now, we won’t discuss these two further.

(3)Applied Economics:

The method which is adopted to solve the economic problem of a country based on the analysis given by theoretical Economics is called applied economics. For example, the policies applied to improve the rate of employment, the rate of national development, and by which the living standard of people can be improved.

Scope Of Economics

Now let’s move on to the most crucial part. The scope is different because of the two subheads, microeconomics, and macroeconomics. Economists use different economic theories and laws to solve different economical problems. To make the economy stable, the government of different countries seeks help from economists. Economic laws are applied to the whole economy, small organizations, and multinational corporations.

For example, The Theory of production, monopoly, growth, business cycle, oligopoly, inflation, deflation, etc. This proves that the applicability of economics is very vast.

Some points are considered while stating the scope of this field of study.

  • What is the subject matter?
  • Does economics study the individual or collective behavior of people?
  • Does economics suggest the goodness or evilness of human wants?
  • Do the economic conditions in society apply, or is it neutral in this regard?
  • Whether economics is a science or an art?

So with all these points, different questions go around in our heads. The different economists explained all this to clear the confusion.

Individual Or Collective Behavior

 It is a social science, so it deals with society. That’s why collective economic behavior is studied instead of people’s behavior. The best example is how a nation can satisfy unlimited wants with limited resources. The laws are also formulated after studying collective behavior with further help to solve individual economic problems. Because there are different types of people, the individual study would become useless because of the different opinions and wants of different individuals. Thus collective behavior is studied in economics.

Likes & Dislikes Of Wants:

The ancient economists viewed that it has no relation with the nature of wants. So this means it has no concern with the goodness or badness of the wants. Human desires are unlimited, and sometimes humans tend to desire things that are not so good for them, but the desire makes it hard to refuse, so they use every possible way to get that, no matter if the means of the resource is legal or illegal.  As Professor Robbins said, it is a positive science, so it has no concern with the type of wants. Positive science does not determine the objective. Instead, it provides only a manner of thinking and resources.