Economics: Science and Classification

Economics as a Science

• Economics is an empirical, social, and positive science.
• The scientific knowledge differs from regular knowledge as there is a method used to explain the reality of a study.
• Economics is a science that establishes laws, describes cause-effect relationships and observes interrelations between the parts.
• Consists of grounded, reasoned, and systematized knowledge.
• Empirical since its knowledge comes from real-world experience.
• Methods of induction and deduction are utilized.
• Uses the observation of concrete facts to formulate laws using inductive means
• Proceeds to verify using deduction
• Economics as a science does not employ the experimental method.
• Observations are made, but economists do not manage any alterations in the study.
• Uses historical analysis to test hypotheses.

Economic Classification

• Economics begins by observing the facts and phenomena.
• Classifies by presenting common characteristics and ignoring specifics.
• Types such as consumers and companies can be created.
• Employs sciences like logic or mathematics to create laws for model constructions, so it can verify later.
• Models describe economic system operations through a series of simultaneous equations.
• Expresses relations between measurable economic magnitudes considered in system function.
• This coordination of empirical propositions is key to infer new propositions.
• Social science that researches human actions and relations, determining economic needs and norms.
• Social science that is not exact, and is considered a branch of wisdom.
• Individual and collective destiny is possible.
• Insights from various disciplines help define limits.
• Economists are often inaccurate, and do not make predictions as they know what will happen, but because they are asked to.
• Positive science that applies a causal and relative way of thinking.
• Normative economics concerns on what should be.
• The fields are referred to of economic theory and economic policy.
• Economic policy is defined as the intentional movement of methods to have certain aims.
• Inseparable from politics for many years, as it took until 1870, with Marshall declaring Principles of the Economy.
• The adjective politics was removed to distinguish science from constant change and modification.
• Differentiation between being and obligated to be became more defined with Ricardo.
• Mill, Senior, and Keynes strongly attempted to make 2 different fields of economic thinking.
• The possibility of misinterpreting each is always apparent.
• At formulation, researchers must evade the borders of the fields, as Keynes stated that what is and should be is prone to avoid responses to both types.
• Positive science has the objective being the creation of a theory/hypothesis that produces valid predictions and the building of theory can explain knowledge.
• Material being is the behavior of economics units, and the object under study is the behavior regarding choices between finite and scarce resources.

Economic Methodology

• Theoretical creation corresponds to the fundamental methodological assumptions. Suppositions must be built, and knowledge must be performed through induction or deduction.
• The first steps are reduced to deductive exercises.
• Kantian philosophy was assumed at the end of the 18th century when economics was born.
• This assumed philosophy materialized into economic analysis that analyzed the system and looked for economic law, which lead to the analysis of the economic society. Economic development was linked to the attempt to bring the permanent order of Newtonian physics to scientific and economic systems.
• The natural order defended condemnation or research.
• "Apriorism" appears, which supported logic with critical validation.
• Theories are true/accepted scientifically if they are coherent logically, otherwise they are rejected.
• Associated with Senior, and supported by Von Mises and Robbins.
• Deductive knowledge constructs with experience and observation unable to explain variable relationships for there are prerequisites that are not analyzable to any experiences.
• Assumes actions are not random to rational beings, and are derived from general principals that work rationally to specific cases.
• Human behavior should be based on intention as opposed to other sciences which look into the accidental.

Historicism and Logical Positivism

• Blaug states 19th-century methodologists were verificationists.
• Methodology looked to create safety to economic science from attacks proceding from other sciences.
• Position was attacked by marxism and german historicists.
• Marx differentiates from classics due to his methodology.
• Analyzation of economic behavior cannot be done with a microscope, instead, the power to extract the underlying structure is needed.
• Deduction built a global, rational, structured understanding.
• The theory combines with history to contract phenomena.
• Economics can only be understood in social, historic, and institutional structures.
• Lacks universal validity over all time that some economists had planned it to have.
• Historicism, founded by Roscher, rose in Germany.
• Integrated economic life into a political and social structure.

Relations With Other Sciences

• There is support and collaboration among scientific studies.
• Economics has many issues as it understands social, psychological, labor, technological, juridical, and moral questions.
• Some sciences have links in a positive side as helping economics explain what is.
• Relations with others are in the normal aspect as conditions are made to measure economic actions required.
• Includes math, stats, logic, law, politics, sociology, demography, ethics, tech and education.
• Mathematics is used to describe concepts and assumptions that establish a theory about how Economics.

Economic Concepts and Evolution

• Definitions of economics can be controversial and disputed.
• The word “economics” is an old term that drives from “oikos”.
• Oikos is a greek word that signified house and “nomos” meant rule.
• “Oikonomia” meant home rule or domestic administration.
• Throughout the years, definitions that would be debated and replaced were being created.
• Adam Smith, Father of Economics defined economics as the: Investigation about the nature and the richest causes.
• Baptiste Say defined economics as the: science studying the richness and the laws of its production and distribution.
• Mill defined economics the same, which was then brought to Spain.
• The wealth term's precision in Spain was the main concern.
• The idea of richness developed by presenting economics as the science of well-being, with Marshall stating: Economics examines the individuals lives. It also examines humans actions and social that are related to materials of well being.
• Centralize wealth as the focus, and provides a partial outlook or ignores activities.
• Activities should be obtained by centering the wealth.
• Definition of "science of prices and changes" had the echo of utility theories and general equilibrium, in which changes aggregated the formation of commerce where prices regulated.
• Lionel Robbins defined economics as a science as the study of human behaviors as election of scarcity.
• Samuelson defined economics as the study of how society uses scarce ways to trade.
• In definitions based on scarcity, it is implicit that the hypothesis of rationality exists, but there's some disagreement on the concept of humanity.
• There is no last definition but they are useful to explain an aspect while none are complete, and there is constant study, analysis and improvement.