Economics can be a difficult subject to define and understand. Below, we take you through the key things you should know about economics.
What Is Economics?
Economics can be notoriously difficult to define as a subject, which is not particularly helpful if you’re currently studying economics at school or university.
Many economists have sought to find their own definition of the field, including:
- Adam Smith;
- John Maynard Keynes; and
- Lionel Robbins.
Whether you believe that economics is more the result of the actions of self-interested individuals, in line with Adam Smith’s theory, or you, in fact, believe economics is a “dismal science” as Thomas Carlyle quipped during the 19th century, the fact is that the meaning of economics is widely defined in a number of textbooks, and in reality its definition boils down to your own views of what it means to study economics and the principles of economics.
For example, many of the earlier economists, including the classical school, often held the belief that economics and economic theory were primarily defined by wealth creation.
Whilst there’s an aspect of economics that undoubtedly focuses on money and wealth, within both local and global economies, of which monetary policy is a good example, there are other definitions that argue that economics should be considered within a broader context.
For example, Alfred Marshall once called economics “a study of mankind in the ordinary business of life.” Clearly, such a definition is much wider and leads us to think of just how prevalent economics and economic concepts are in our everyday lives.
Indeed, many today would consider that economics at its core is the study of the human condition and that economic principles seek to explain what drives us to make the decisions and take the actions that we do.
As a result, relatively newer economic fields have appeared over the past few decades that examine the consequences of human action, of which behavioural economics is one.
However, the difficulty in defining what economics as a subject actually is, and what economic analysis means, is increased when you consider that there are many different types of economic study. For example:
- International economics;
- Financial economics;
- Behavioural economics; and
- Environmental economics.
Additionally, economists can focus on macroeconomic matters and issues, such as monetary and fiscal policy, international trade, employment or gross domestic product, or they could spend more of their time looking at microeconomics.
As macroeconomics and microeconomics are very distinct from one another, the former looking at the economy as it operates as a whole, whilst the latter examines the impact of the individual on the economy; it raises the question of whether it’s fair to apply one definition of economics to the entire field, when the work of economists can differ so much?
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Finding Your Own Definition
The uneasy answer is that there is not truly a definition of economics that is likely to satisfy every economist or a definition that captures the study of economics as a whole.
However, the important thing for any economics student is to try and find a definition of economics that best suits them. By researching different economic definitions, you’ll come to understand what a wide range of economists, past and present, think about their field. What’s more, you’ll also gain a wider appreciation of the subject as a whole, and develop opinions about where your interests may lie.
Of course, if you need any help researching famous economists, then a Superprof economics tutor near me can also be on hand to assist you.
25 Economics Terms You Must Know
Anyone seeking to develop their economics knowledge, whether to help them prepare for an exam, learn more about the field generally, or to improve their overall grades, would do well to ensure they are familiar with the most common economics terms.
There are so many terms in economics, such as:
- Bull and bear markets;
- Keynesian economics;
- Price elasticity of demand; and
- Inflation, deflation, and stagflation.
Due to the amount of terminology, it can be a difficult subject to understand if you’re unfamiliar with the lexicon. Although this can make studying economics slightly difficult at first, you’ll find that by learning new terms on a regular basis, you’ll be able to use those terms with confidence in your next essay, coursework assignment, or exam.
As such, it’s best to take it slow and aim to familiarise yourself with one or two key terms a week, moving on when you’re comfortable with the term’s use and what it means. You could even divide your learning into sections, looking at macroeconomic terms one week, and microeconomic terms the next.
If you need any help learning key economic terms, or would like to learn even more about economic lexicon, then you can also hire a tutor from Superprof to walk you through the most common economic terms you’ll encounter.
Superprof offers tuition both online and in-person, individually or in groups, so it’s really easy to find a great tutor and start learning as soon as possible.
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Economics: Theory or Science?
As we’ve seen above, there’s been some debate within the economics community as to what, exactly, the definition of economics is. However, that has not been the only debate within the field.
One of the fiercest debates in recent years is around whether economics should be considered a science, a social science, or perhaps no science at all. The debate has been going on for years, but it appeared to peak in 2013 following the award of the Nobel Memorial Prize in Economic Sciences to three economists:
|Name||Date of Birth||Occupation|
|Eugene F. Fama||1939||Professor, University of Chicago|
|Lars Peter Hansen||1952||Professor, University of Chicago|
|Robert J. Shiller||1946||Professor, Yale University|
The argument some had was that two of the economists in question - Robert Shiller and Eugene Fama – seemed to have opposing ideas to one another.
The debate has continued on over the years, with some arguing that economics cannot be a natural science, such as biology, chemistry, or physics, because economic experiments cannot be undertaken in the same controlled conditions.
This is often because many economics tests are aimed at examining human behaviour, which, as we know, can be irrational and unpredictable at times.
As a result, many have resolved upon calling economics a social science that belongs alongside fields such as psychology, politics, or law.
Although it may be difficult to justify calling economics a natural science, this does not diminish its importance as a subject, nor does it discredit economic theories that use mathematical or statistical elements to create an argument for economic trends or human behaviour.
Economics is often all around us, from the daily news headlines to how we fundamentally interact with one another, so as a subject its importance remains uncontested.
History of The Nobel Prize in Economics
Regardless of whether economics is considered to be a natural science or social science, the fact remains that it is still classified as a science according to the Nobel Prize in Economics, the full name of which is The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
Although the original five Nobel Prize fields were established in 1895 in the will of Albert Nobel, a Swedish chemist, inventor, and industrialist, it wasn't until 1968 that the Nobel Prize for Economics was actually established.
Since then, the Nobel Prize in Economics has been awarded to a great number of esteemed economists, including:
- Friedrich August von Hayek;
- Milton Friedman;
- Daniel Kahneman; and
- Joseph Stiglitz
The latest recipient of the Nobel Prize in Economics was actually Richard H. Thaler for his work in the realm of behavioural economics. Although the Laureates have been awarded the Nobel Prize in Economics for many subjects of study, macroeconomics has emerged as a particularly popular topic for winners.
If you are interested in learning more about the great economists of the day, and the works that have earnt them such a prestigious and renowned accolade within the academic community, then you could look to hire an economics tutor to help explain the theories that these Nobel Laureates have.
Superprof has a range of enthusiastic economics tutors, who can help teach you about specific economic theories or models and can test you about what theories and views Nobel Laureates hold.
Not only is learning about the Nobel Prize in Economics and its winners valuable in terms of the insight you gain into the latest trends in economics, but it will also improve your own economics knowledge, which can have a beneficial impact on your own studies and exam performance.
Even if you would rather focus on learning more about a specific area of economics, such as macroeconomics, financial economics, or behavioural economists, Superprof has tutors that have experience teaching these areas and can help you broaden your knowledge of these topics.