{"id":6163,"date":"2013-05-10T01:49:16","date_gmt":"2013-05-10T09:49:16","guid":{"rendered":"http:\/\/www.oeconomist.com\/blogs\/daniel\/?p=6163"},"modified":"2021-10-29T18:43:22","modified_gmt":"2021-10-30T01:43:22","slug":"on-the-definition-of-economics","status":"publish","type":"post","link":"https:\/\/www.oeconomist.com\/blogs\/daniel\/?p=6163","title":{"rendered":"On the Definition of Economics<\/q>"},"content":{"rendered":"

Occasionally, I am confronted with the question of the nature of economics<\/span>.<\/p>

A great many people believe that they know<\/em> what economics is. Many of these people have inferred<\/em> a definition for economics<\/q> from references in the popular media and from politicians to the economy<\/q>, and from popular media presentations of or about various people labelled economist<\/q>. Some people have taken one or two courses in high school or in college about something called economics<\/q>, and have presumed that whatever definitions were given in their textbooks were uncontroversial<\/em>.<\/p>

Well, the fact is that the popular media do no better job in representing economics than they do in representing those subjects with which you (my reader) have a real familiarity. High school economics textbooks are often disasters written by people who aren't economists. First-year college textbooks often over<\/em>-simplify things. And when a respected economist attempts to define economics<\/q>, while his definition may be embraced by a great many other respected economists, it will be challenged by still other respected economists! (I'll define what I here mean by economist<\/q> below. If you must have a definition right now, then take it to mean one who has received a degree or appointment by which he or she has been so labelled!)<\/p>

Tromping where angels fear to tread, I am going to tell you how I<\/em> define economics<\/q>.<\/p>

Economics<\/span> is a cluster<\/em> of studies. The studies that I have in mind concern these questions:

How do<\/em> individuals allocate the resources at their disposal?<\/td>How are<\/em> prices formed?<\/td>How are<\/em> resources allocated within a community?<\/td><\/tr>
How should<\/em> individuals allocate the resources at their disposal?<\/td>How should<\/em> prices be formed?<\/td>How should<\/em> resources be allocated within a community?<\/td><\/tr><\/tbody><\/table><\/div> They are clustered<\/em> because significant theories (propositional structures) hold that these studies have important inter-relationships.<\/p>

(And now I'll define economist<\/q> to mean someone who engages in more than casual study of any one or more of these areas<\/span>.)<\/p>

Someone may come along and show some serious flaw in my definition. But, on the expectation that it works<\/em>, I'm going to discuss it.<\/p>

There's a whole bunch of things not explicitly<\/em> mentioned in my definition that lay-people associate with economics<\/q>. That's because those things are particular<\/em> cases of more general<\/em> concepts. For example, households<\/span>, firms<\/span>, industries<\/span>, bourses<\/span>, and nations<\/span> are each sorts of communities<\/span>. There are economists whose studies concern social orders in which all<\/em> of these communities exist, but the presumption of such a social order is not intrinsic to economics. Business administrators may find economics useful, but they also may find mathematics<\/em> useful. Neither is simply a hand-maiden of business studies.<\/p>

Not everyone who has attempted or attempts scientific or scholarly consideration of these questions accepts the existence of the inter-relationships described by the aforementioned theories. In some cases, they may subscribe to theories which accept significant inter-relationship, but on some very different theoretical basis. In some cases, researchers may claim that, where other theories see a bilateral causality, there is just a one-way causality. For example, these economists may insist that, while prices inform individual decisions, those prices are formed without regard to individual decisions.<\/p>

Further, even economists who accept that these studies are all importantly inter-related don't necessarily spend much-if-any effort studying in all areas. Indeed, some may confine themselves to just one area. For example, every<\/em> one of the living economists who is widely known to lay-people is a macro<\/em>economist, which is to say that he or she is concerned with the behavior of aggregates such as prices levels, employment rates, and GDP<\/abbr>. But, as a share of economists more generally, macroeconomists are a tiny<\/em> minority. Most economists don't like<\/em> macroeconomics. It is signally ignorant to ask a typical economist what the stock-market is going to do most days, because that's outside of his or her area of concern.<\/p>

You surely noticed that the first row of question were non-normative, while the second row were corresponding normative questions. Some economists would insist that there is very little to be said normatively. On the other hand, often of normative theory of a sort is used to approximate<\/em> non-normative theory, as when it is assumed that individuals have complete, transitive, and acyclical preferences.<\/p>

For what it's worth, the words economy<\/q> and economics<\/q> comes to us from the Greek stems \u1f40\u03b9\u03ba<\/span>-<\/q>, referring to the household<\/span>, and \u03bd\u03bf\u03bc<\/span>-<\/q>, referring to the law<\/span> or to custom<\/span> (with the -ic-<\/q> from the adjectival suffix -\u03b9\u03ba<\/span>-<\/q>). Greek \u1f40\u03b9\u03ba\u03bf\u03bd\u03bf\u03bc<\/span>[\u03b9\u03ba<\/span>]-<\/q> referred to management of the household and of its resources. <\/p>

Transliterated into Latin, \u1f40\u03b9\u03ba\u03bf\u03bd\u03bf\u03bc<\/span>[\u03b9\u03ba<\/span>]-<\/q> became oeconom<\/span>[ic<\/span>]-<\/q> and entered English thus. Somewhere along the line, the initial o<\/q> fell silent.<\/p>

In English, \u0153conomy<\/q> referred to resource management, typically at the the level of the household, that was wise, frugal, or perhaps tight-fisted, or to a savings realized by such management (a definition that still has some currency to-day); and \u0153conomist<\/q> to a manager who was wise, frugal, or tight-fisted. Conceptualizing a political community as household<\/span>, the term political<\/u> \u0153conomy<\/q> began to be used in reference to the sorts of management in which political authorities might engage. (German has a very similar term, National\u00f6konomie<\/span><\/q>.)<\/p>

The initial o<\/q> began to fall away from \u0153conom-<\/q>; and, in part because of the currency of political [o]economy<\/q>, [o]economist<\/q> became increasingly dissociated from thoughts of households or of other work-a-day management, and more concerned with a sort of philosophical or scientific study (though not, as it happens, before The Economist<\/cite><\/a> got its name).<\/p>

Eventually, peculiar association of economics<\/q> with the literal household<\/em> was so forgotten that, when a term was wanted with the original<\/em> sense, the philologically redundant home<\/u> ec<\/u>onomics<\/q> was adopted, with only quiet laughter off in the distance.<\/p>

A few people now-a-days call themselves oeconomist<\/q>, spelled in that archaic manner, as a way of asserting that they are or seek to be wise practical managers of resources. That's not, however, why I label myself thus.<\/p>

Although my published work doesn't look simply modernistic<\/span> but in fact hyper-modernistic<\/span>, I'm sympathetic to much of the criticism of modernism<\/span> in economics; I think that we need to reconsider some of the work done before the era of modernism<\/span>. My \u0153<\/q> is a way of saying that there's something<\/em> deliberately old-fashioned<\/span> to my thinking.<\/p>","protected":false},"excerpt":{"rendered":"Occasionally, I am confronted with the question of the nature of economics. A great many people believe that they know what economics is. Many of these people have inferred a definition for economics from references in the popular media and from politicians to the economy, and from popular media presentations of or about various people […]","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"footnotes":""},"categories":[6,117,36,4],"tags":[947],"class_list":["post-6163","post","type-post","status-publish","format-standard","hentry","category-commentary","category-communication","category-economics","category-public","tag-definitions"],"_links":{"self":[{"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=\/wp\/v2\/posts\/6163","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6163"}],"version-history":[{"count":2,"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=\/wp\/v2\/posts\/6163\/revisions"}],"predecessor-version":[{"id":11867,"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=\/wp\/v2\/posts\/6163\/revisions\/11867"}],"wp:attachment":[{"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6163"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6163"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6163"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}