From: EconomicPoint.

com:

Branches of Economics
 Behavioural Economics
 Ecological Economics
 Environmental Economics
 Health Economics
 Information Economics
 International Economics
 Labour Economics
 Monetary Economics
 Population Economics
 Public Finance
 Urban Economics

Microeconomics
In our daily lives, we face innumerable economic decisions, such as
choosing what to buy with available money or what to do during our free
time. These topics, which are related to the decisions of individual
agents (individuals, families, businesses), are the object of study in an
area of economics called microeconomics.

Macroeconomics
Another area of economics is macroeconomics, which studies the
relationship between economic aggregates. Economic aggregates are
elements that are made up of the sum of other variables. For instance,
the Gross Domestic Product (GDP) is the sum of everything that is
produced by each individual and organization within a country. The
consumer price index is made up of the average price of numerous
products. The aggregate investment is the sum of the expenditures in
investment of all businesses and families of a country, etc.

Branches of Economics
Economics, in addition to the two perspectives already covered
(macroeconomics and microeconomics), has many other branches,
each one specializing in different objects of study. Thus, we have labor
economics, which studies the labor market; public finances, which is
dedicated to the study of the income and expenditures of the
 government; international economics, which studies the flow of
resources between countries, etc.

The studies conducted by each of these sub-disciplines can take elements

from both macroeconomics and microeconomics as well as from other
social sciences such as history, psychology, etc., and from exact sciences
such as logic and mathematics.

Branches of Economics
 Behavioural Economics: It studies the effects of social,
psychological, cognitive, and emotional factors on the economic
decisions. It uses mainly microeconomics.
 Ecological Economics: It studies the relation between the economy
and the environment and how to achieve sustainable development.
 Environmental Economics: How natural resources are developed
and managed. It uses mainly microeconomics.
 Health Economics: It studies the economy of the health and health
care sector. Focused on microeconomics
 Information Economics: How information and information
systems affect an economy and economic decisions. It uses
mainly microeconomics.
 International Economics: How economic relations between
countries, mainly trade, investment and labor flows, affect the
economies. It can use microeconomics models, but is focused on
macroeconomics aggregates.
 Labour Economics: It studies the labour (job) markets. It also uses
a lot of tools from the microeconomics, but it can include
macroeconomic analysis.
 Monetary Economics: It studies means of payments (money,
etc.) markets.
 Population Economics: It studies demography using the tools of
economics, and the relation between economy and population.
 Public Finance: It studies the role of the government in the
economy: public spending, taxes, deficit, etc.
 Urban Economics: It applies the tools of economics to the study of
cities: transit, housing, crime, etc.

Taxonomy Terms: 

 Macroeconomics
 Microeconomics

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 https://economicpoint.com/branches-economics

Two Main Branches of Economic Analysis

by Steven Melendez; Updated August 08, 2018

Related Articles

Economics can seem as if it is an obscure subject, in that you haven't had the chance to study it much, but
parts of it can be very understandable. A simple definition of economics is the study of how people use
resources, especially limited resources.

Tip

 Economic analysis is usually divided into two main branches, microeconomics and

macroeconomics. Microeconomics studies how individual people and businesses function in specific

situations, while macroeconomics studies how the entire economy of a nation, or even of the world,

functions.

A Simple Definition of Economics

Different experts might offer different exact definitions of economics, but most of the time if you ask for a

simple definition of economics, you'll get something involving how people use resources given certain

incentives. For example, economists might study when people tend to save money or spend it, how housing

prices react to changes in zoning laws or how the economy is affected by new spending mechanisms like

credit cards or bitcoin.

Often, economics can overlap with other social sciences such as sociology, political science and

psychology, and some of the mathematical and research tools, like statistical analysis and surveys, can be

the same from discipline to discipline.

Understanding Microeconomics

Microeconomics is the branch of economics that deals with how individuals, including people and

companies, respond to economic conditions. For example, the question of what price points will cause

people to switch from buying beef to chicken falls under microeconomics, as do questions of whether

certain interest rates will cause individual firms will ramp up hiring.
 Some microeconomics focuses on production, meaning the transition of resources of one form to another as

in a factory or office. Labor economics also generally falls under microeconomics, understanding what

motivates workers and their employers and causes hiring, layoffs and changes in wages.

Because microeconomics is focused on topics near and dear to many business owners' hearts, it's often

considered more immediately useful and less abstract than macroeconomics, which looks at the economy at

large.

What's Involved in Macroeconomics

Macroeconomics, on the other hand, looks at the economy as a whole. That includes trying to understand

what drives the business cycle from boom to bust, or from growth to recession, and what controls

overarching economic indicators such as gross domestic product, unemployment and inflation.

For those reasons, macroeconomics lends itself less to experimentation than microeconomics, and the

science has, in some ways, been slower to develop.

Macroeconomics can therefore be of use to students of history, trying to understand why certain countries

prospered at different times, and to politicians and central bankers at places such as the Federal Reserve

that are looking to steer the economy into the future.

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Branches of economics
 Tejvan Pettinger June 8, 2018  economics

Economics is a broad subject concerned with the optimal distribution of resources in

society. Within the subject, there are several different branches which focus on
different aspects. Also, there are different schools of thought which generally have
different views on aspects of economics.

The first way to split economics is Microeconomics and macroeconomics.

 Microeconomics – concerned with individual markets and small aspects of the

economy.
 Macroeconomics – concerned with the whole aggregate economy. Issues such as
inflation, economic growth and trade.

To some extent, the split is artificial. Aspects of microeconomics filter into macro-
economics. For example, if you take the study of developing economies, this involves
both looking at micro-aspects of development (agricultural markets) and macro-
aspects like growth. See the difference between macro and microeconomics.
 Branches of economics
1. Classical economics
Classical economics is often considered the foundation of modern economics. It was
developed by Adam Smith, David Ricardo, . Classical economics is based on

 Operation of free markets. How the invisible hand and market mechanism can enable
an efficient allocation of resources

 Classical economics suggests that generally, economies work most efficiently when
government intervention is minimal and concerned with the protection of private property,
promotion of free trade and limited government spending.
 Classical economics does recognise that a government is needed for providing public
goods, such as defence, law and order and education.

2. Neo-classical economics
Key people: Leon Walrus, William Jevons, John Hicks, George Stigler and Alfred
Marshall

Neo-classical economics built on the foundations of free-market based classical

economics. It included new ideas such as

 Utility maximisation.
 Rational choice theory
 Marginal analysis. How individuals will make decisions at the margin – choosing the
best option given marginal cost and benefit.

Neo-classical economics is often considered to be orthodox economics. It is the

economics taught in most text-books as the starting point for economics teaching.
The tools of neo-classical economics (supply and demand, rational choice, utility
maximisation) can be used in new fields and also for critiques.
 Keynesian economics
Key people: John Maynard Keynes

Keynesian economics was developed in the 1930s against a backdrop of the Great
Depression. The existing economic orthodoxy was at a loss to explain the persistent
economic depression and mass unemployment. Keynes suggested that markets
failed to clear for many reasons (e.g. paradox of thrift, negative multiplier, low
confidence). Therefore, Keynes advocated government intervention to kick-start the
economy.

Keynesian economics is credited with creating macroeconomics as a distinct study.

Keynes argued that the aggregate economy may operate in very different ways to
individual markets and different rules and policies were needed.

Keynes didn’t reject all elements of neo-classical economics but felt new ideas were
needed for the macro-economy – especially with the economy in recession.

 Keynesian economics

Monetarist economics
Key people: Milton Friedman, Anna Schwartz.

Monetarism was partly a reaction to the dominance of Keynesian economics in the

post-war period. Monetarists, led by Milton Friedman argued that Keynesian fiscal
policy was much less effective than Keynesians suggested. Monetarists promoted
previous classical ideals, such as belief in the efficiency of markets. They also placed
emphasis on the control of the money supply as a way to control inflation.

Monetarist economics became influential in the 1970s and 1980s, in a period of high
inflation – which appeared to illustrate the breakdown of the post-war consensus

 Monetarism

Austrian economics
Key people: Ludwig Von Mises, Carl Menger

This is another school of economics that was critical of state intervention, price
controls. It is broadly free-market. However, it criticised elements of classical school –
placing greater emphasis on the individual value and actions of an individual. For
example, Austrian economists argue the value of a good reflects the marginal utility
of the good – rather than the labour inputs.

 Austrian economics

Marxist economics
Key people: Karl Marx

Emphasises unequal and unstable nature of capitalism. Seeks a radically different

approach to basic economic questions. Rather than relying on free-market advocate
state intervention in ownership, planning and distribution of resources.
 Neo-liberalism/Neo-classical
A modern interpretation of classical economics. Considerable overlap with
monetarism. Essentially concerned with the promotion of free-markets, competition,
free trade, privatisation, lower government involvement, but some minimal state
intervention in public services like health and education. Few identify as ‘neo-liberal’
– sometimes used as a term of abuse.

 Neoliberalism | Related terms: Washington Consensus

New Branches of economics

Environmental economics/welfare economics
Key people: Garrett Hardin, E.F. Schumacher, Arthur Pigou

This places greater emphasis on the environment. This can include:

 Neo-classical analysis of external costs and external benefits. From this perspective,
it is rational for man to reduce pollution
 Market failures – tragedy of the commons, Public goods, external costs, external
benefits.
 Environmental economics can take a more radical approach – questioning whether
economic growth is actually desirable.

Behavioural economics
Key people: Gary Becker, Amos Tversky, Daniel Kahneman, Richard Thaler, Robert
J. Shiller,

Behavioural economics examines the psychology behind economic decision making

and economic activity. Behavioural economics examines the limitation of the
assumption individuals are perfectly rational. It includes

 Bounded rationality – people make choices by rules of thumb

 Irrational exuberance – People get carried away by asset bubbles.
 Nudges/Choice architecture – how the framing of decisions affects the outcome

Development economics
Key people: Simon Kuznets and W. Arthur Lewis, Amartya Sen and Muhammad
Yunus.

Concerned with issues of poverty and under-development in poorer countries of the

world. Development economics is concerned with both micro and macro aspects of
economic development. Issues include

 Trade vs aid
 Increasing capital investment.
 Best ways to promote economic development
 Third World debt

Econometrics
Key people: Jan Tinbergen

Use of data to find simple relationships. Econometrics uses statistical methods,

regression models and data to predict the outcome of economic policies. For
example, Okun’s law suggests a relationship between economic growth and
unemployment.

Labour economics
Key people: Knut Wicksell

Concentration on wages, labour employment and labour markets. Labour economics

starts from neo-classical premise of labour supply and marginal revenue product of
labour.

Recent developments in labour economics have placed greater emphasis on non-

monetary factors, such as motivation, enjoyment and labour market imperfections.

Other schools of economics

Chicago school – Based on neo-classical economics, rational choice and benefits of
free markets. Key people from Chicago university, include Frank Knight, Milton
Friedman, Eugene Fama and Gary Becker

Institutional economics – A look at how institutions, society and social trends can
influence economics. A forerunner of behavioural economics. Key people
include: Thorstein Veblen, John Kenneth Galbraith, Ha-Joon Chang.

Distributism/social democratic approach. Seeking a third way between capitalism

and socialism.

Real Business Cycle – Models that suggest macroeconomic fluctuations caused by

supply-side changes, such as technological shocks. See – Real business cycle

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