Economics As A Social Science Flashcards
What is economics
The study of how individuals make decisions about the allocation of scarce resources
What is economics classified as a subject
It’s classified as a social science and uses the scientific method as the basis for its investigation
How are economic interactions explained
With models and theories
What is the ceteris paribus assumption used in
Used to help build models
What does positive economics deal with
Statements of fact that can either be refuted or supported
What does normative economics deal with
Deals with value judgments, often in the context of policy recommendations
What is the scientific theory ??
At its most basic is quite easy to understand : a scientist..
Postulates (put forward) a theory - a hypothesis is put forward which is capable of refutation eg the universe is geocentric.
Then gathers evidence to support the theory or refute it, gathering evidence may be done through controlled experiments
Accepts, modifies or refutes the theory - theories which gain universal acceptance are often called laws
Eg economics law of demand and supply
Simply it’s: hypothesis, evidence,
Accept if it right or no
What is a theory that gains universal acceptance also called
A law
what’s the struggle for the economist collecting data?
Often not possible to set up experiments to test hypothesis but or establish control groups or to conduct experiments in environments which enable one factor to be varied and others are kept constant
How does the economist collect data
Data has to be gathered in the ordinary everyday world where many variables are changing over any given time period
Often becomes difficult to decide whether the evidence supports or refutes particular hypothesis
Sometimes economist come to very different conclusions
Why is data like “it’s likely that” or “this may possibly happen” used by economists
Because there is insufficient data to make firm predictions - due to other variables changing and human behaviour is not not predictable to the last penny spent - although human behaviour is broadly predictable
What’s the difference between a theory and model
There’s not exact distinction - an economic theory is generally expressed in looser terms than a model,
Models tend to be more exact like use numbers and mathematical terms, Where as a theory may just be like a statement “the more this, the less that etc” - theories use words
Why do we construct models / theories ? What’s the purpose ?
We want to know why something is as it is - we also use them all the time in deciding how to act
We keep away from fire to prevent getting burnt
What are most theories?? A…. (begins with S)
A simplification of reality if it to be useful
If a model is to be useful is has to be simple - extent of simplification depends upon its use / scale
What does simplification imply
That some factors have been included in the model and some have been omitted. It could even be the case that some factors have been distorted to emphasise particular points in a model
