Economics is generally regarded as a social science, although some critics of the field argue that economics falls short of the definition of a science for a number of reasons, including a lack of testable hypotheses, lack of consensus, and inherent political overtones. Despite these arguments, economics shares the combination of qualitative and quantitative elements common to all social sciences.
- Economics is generally regarded as a social science, which revolves around the relationships between individuals and societies.
- Critics argue that economics is not a science due to a lack of testable hypotheses and ability to achieve consensus.
- Despite these arguments, economics shares the combination of qualitative and quantitative elements common to all social sciences.
Economics is concerned with how an economy and its participants function and behave. Economics studies how goods and services are produced, distributed throughout the economy, and consumed by individuals and businesses. Economics also is concerned with how resources are allocated by governments and businesses to satisfy the wants and needs of consumers.
One of the key areas of focus of economics is the study of the efficiency surrounding production and the exchange of goods as a result of incentives and policies that are designed to maximize efficiency.
Economics is typically broken down into two categories; one of which is called macroeconomics, which is concerned with the aggregate economy. The other category is called microeconomics, which focuses on individual consumers and businesses.
Macroeconomics focuses on how an overall economy and market system operate. Macroeconomics studies the financial and economic conditions that impact and economy as a whole. Some of the metrics that are studied under macroeconomics include inflation, which is the measure of rising prices in an economy, and gross domestic product (GDP), which is an estimate of the value for all final goods produced in an economy.
Macroeconomics especially studies a nation’s economic rate, and how that growth impacts the people in the economy. Macroeconomics analyzes how a country’s growth rate can impact employment or unemployment, average standards of living, as well as the financial viability of businesses or industries.
Macroeconomists develop models to analyze how different sectors of the economy impact one another. Economic models are also used to forecast growth and inflation as well as to measure how government policy impacts the economy. Monetary and fiscal policies are studied and modeled to determine how they impact the livelihood of those who live within the economy.
Microeconomics studies the impact of human behavior and actions as well as how their decisions affect the distribution of resources throughout an economy. Microeconomics focuses on how individuals make certain choices, particularly when factors change, such as rising prices.
Microeconomic models can include an analysis of supply and demand to determine how many resources are in an economy and how that demand or supply impacts consumer purchase patterns as well as prices for those goods. Microeconomics also focuses on, in part, how consumers can achieve utility, which is the maximum amount of happiness derived from consuming a good or service.
Both macroeconomics and microeconomics are considered social sciences. Social science helps to explain how a society functions and is an umbrella term that incorporates several fields of study, including economics.
Social sciences include fields, such as sociology, anthropology, and archaeology, but differ from natural sciences, such as physics and chemistry. Social sciences revolve around the relationships between individuals and societies, as well as the development and operation of societies. Unlike most natural sciences, social sciences rely heavily on interpretation and qualitative research methodologies.
However, social sciences also use a number of quantitative tools used in the natural sciences to chart and understand trends. For example, economists use statistics and mathematical theories to test hypotheses and forecast trends, a process known as econometrics. In addition, many social sciences use surveys and other rigid research methodologies to determine trends and provide clarity to future practices.
Among the social sciences, economics is noteworthy for its early and widespread adoption of formal mathematics in its theoretical development and of statistical methods and quantitative computer applications in its empirical approach to applied research.
The increased reliance on mathematical models to study the economy began with neoclassical economics in the late 19th century and remains essential to theoretical and applied economics.
The Uncertainty of Economics
One of the primary arguments made against classifying economics as a science is a lack of testable hypotheses. Underlying the difficulty in developing and testing an economic hypothesis are the nearly unlimited and often unseen variables that play a role in any economic trend.
The argument against considering economics as a science is based on the fact that controlled experiments cannot be performed in laboratories. The field of chemistry, on the other hand, offers the ability for chemists to test a hypothesis and evaluate those results.
Instead, economists most often analyze historical data either on a nationwide basis or by geographic region. It’s this inability to test hypotheses in a controlled environment (and the ability to eliminate outside influences that could impact results) that makes some argue that economics should not be considered a science.
However, this same critique—that experts cannot perform controlled experiments in a laboratory—could be extended to all social sciences. For example, even branches of natural sciences, such as physics, have theories that have yet to be proven, but society accepts the branch of physics as a science.
Also, the frequency of immeasurable variables in economics allows for competing, and sometimes contradictory, theories to coexist without one proving the other infeasible.
While economics increasingly uses scientific and mathematical methods to track and predict trends, conflicting models, theories, and results often prevent economics from reaching solid consensus as found in many of the natural sciences.
However, these discrepancies and conflicts are inherent in any social science–all of which require an element of interpretation rarely found in the natural sciences. The field of economics contains quantitative and qualitative elements common to all social sciences, and as long as social sciences exist as a class of sciences, economics fits within the class.