Economics Is A Field of Social Science That Studies The

ECO 1
NATURE AND SCOPE OF ECONOMICS

To understand the
subject matter of economics, we tried to look at its
different definitions by different
scholars. The basic concepts of economics are discussed
in other to give a better
understanding of the definitions. There is also the need
to understand the basic economic
problems of any society because other problems revolve
around these problems.
Economics is a field of social science that studies the

behavior of individuals and society
in the distribution and allocation of limited factors of
production to maximize the
production of goods and services to fulfill man’s
unlimited wants and demands.
BRANCHES OF ECONOMICS
Microeconomics deals with the analysis of indi vi dual
parts of the economy. It concerns
factors deter mi ni ng the behavi or of a consumer, the
behavi or of a fir m, the demand for
a good, the suppl y of a good, the price of a good, the
quantity of a good, the perfor mance
of a market, etc.
Mi croeconomi cs studies how i ndi vi dual peopl e and
busi nesses functi on i n specific
situati ons.
Macroecono mi cs on the other hand, l ooks at the
economy as a whol e. That i ncl udes
tryi ng to understand what dri ves the busi ness cycl e
from boom to bust, or from growt h
to recessi on, and what control s overarchi ng economi c
i ndi cators such as gross domesti c
product, unempl oy ment and i nfl ati on. For those
reasons, macroeconomi cs l ends itself
less to experi mentati on than mi croeconomi cs, and
the sci ence has, i n some ways, been
sl ower to devel op.
The rel ati on of Econo mi cs to other Soci al Sci ences
Economi cs is cl assifi ed as a soci al sci ence. Thi s vi ew
makes economi cs an acade mi c
rel ati ve of political sci ence, soci ol ogy, psychol ogy
and anthropol ogy. All of these
di sci pli nes study the behavi or of human bei ngs i ndi vi
duall y and i n groups.
Science deals with systematic studies that signify the

cause and effect relationship. In science, facts and
figures are collected and are analyzed systematically to
arrive at any certain conclusion. For these attributes,
economics can be considered as a science.
economi cs is treated as a soci al sci ence because of the

foll owi ng feat ures:
· It i nvol ves a systemati c coll ecti on of facts and fi
gures.
· Li ke i n sci ence, it is based on the for mul ati on of
theori es and l aws.
· It deal s with the cause and effect rel ationshi p.
Econo mi cs and Psychol ogy:

Economi cs is particul arly concerned with consumpti on,
producti on and resource use by
i ndi vi dual s and groups. Economi cs is al so concerned
with the procures by whi ch
househol ds and fir ms make deci si ons about the use of
scarce resources.
Inevitabl y, thi s defi nition of the ‘territory’ of economi
cs l eads to some overl appi ng with
the other di sci pli nes. Psychol ogi sts and economi sts
share an i nterest i n what moti vates
peopl e to take certai n acti on.
Econo mi cs and Sociol ogy:

Whil e soci ol ogi sts are interested i n all facets of organi
zed human activity, economi sts are
i nterested mai nl y i n organi zed acti viti es that rel ated
o the production and consu mpti on of goods and servi
ces. As a general rul e economi st assume that i ndi vi
dual s pursue their
self-i nterest and respond to vari ous si gnal s or
incentives i n the li ght of that self-i nterest.
the pri mary i nterest of economi sts li es i n those acti
ons that are refl ected i n
market acti vity or i n economi c deci si ons made
through government.
Econo mi cs and Hi story
Economi cs and hi story are cl osel y rel ated. Hi story is
a record of the past events. In
hi story, we survey economi c, political and soci al
conditi ons of the peopl e i n the past. To
a student of hi story, love affairs, marri ages and even
murders of ki ngs are i mportant
subj ects of study.
Econo mi cs and Ethics

Et hi cs is a soci al sci ence. It deal s with moral questi
ons. It di scusses the rul es that govern
ri ght conduct and morality. It deal s with questi ons of ri
ght and wrong. It ai ms at
promoti ng good life. There is connecti on bet ween
economi cs and ethi cs.
Whil e
economi cs, accordi ng to Marshall, ai ms at promoti ng
materi al welfare, ethi cs ai ms at
promoti ng moral welfare. When we di scuss economi c
probl ems, often we consi der ethi cal
issues. The government i ntroduced prohi biti on i n
many states for ethi cal reasons, though
there was heavy l oss of revenue to it.
But Li onel Robbi ns strongl y beli eves that an economi
st as an economi st shoul d not
consi der ethi cal aspects of economi c pr obl ems. But
many economi sts do not agree with
hi m. They beli eve that economi cs cannot be di ssoci
ated from ethi cs. Even Marshall
consi dered economi cs as a handmai d of ethics. He l
ooked at economi cs as a study of
means to better the conditi ons of human life.
Econo mi cs and Statisti cs

One maj or functi on of an economi st is to conduct
research. The job of the company
economi st is to i nvestigate economi c aspects of vari
ous deci si ons Government agenci es
and pri vate busi ness fir ms generate a vast array of
economi c statistics on such matters
as i ncome, empl oy ment, pri ces and expenditure
patterns. A t wo- way street exi sts
bet ween statistical data and economi c theory.
economic
theory helps to expl ain whi ch economi c variabl es are
likel y to be rel ated and why they
are li nked. Statistics do not tell their own story.
We must utilize economi c theory to properl y i nterpret
and better understand the actual
statistical rel ati onshi ps among economi c variabl es.
Econo mi cs, mat he mati cs and stati sti cs

Among other sci ences, economi cs is rel ated to mat
hemati cs and stati stics. Statistics is
the sci ence of averages. It is the sci ence of counti ng.
Many tabl es and di agrams used i n
economi cs are based on statistical anal psi s. Mat
hemati cal met hods are l argel y used i n
modern economi cs.
Now we have a new sci ence call ed econometri cs. It
makes use of stati sti cs and
mat hemati cs i n economi cs. The econometri c soci ety
was founded in 1930, and the first
Nobel prize i n economi cs was awarded to Jan Ti
nbergen and Ragnar Frisch for their
contri buti on to econometri cs.
Econo mi cs as an Art
It is sai d that “knowl edge is sci ence, acti on is art.”
Economi c theories are used to sol ve
vari ous economi c problems i n soci ety. Thus, it can be i
nferred that besi des bei ng a soci al
sci ence, economi cs is al so an art.
Econo mi cs as a sci ence

economi cs is a sci ence or an art. Sci ence i s a
systemati zed body of knowl edge. Just as physi cs and
chemi stry are sci ences, economi cs
is also a sci ence. We observe facts, conduct experi
ments and make generalizati ons i n
physi cs and chemi stry after testi ng the results. The
same sci entific met hods are foll owed
i n economi cs al so. Economi cs, like all other sci ences,
studi es the rel ati onshi p bet ween
cause and effect.

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ECO 1

NATURE AND SCOPE OF ECONOMICS

Economics is a field of social science that studies the

Science deals with systematic studies that signify the

economi cs is treated as a soci al sci ence because of the

Econo mi cs and Psychol ogy:

Econo mi cs and Sociol ogy:

Econo mi cs and Ethics

Econo mi cs and Statisti cs

Econo mi cs, mat he mati cs and stati sti cs

Econo mi cs as a sci ence

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