by Bond Snodgrass of Awakened Economics
If you asked someone untrained in economics, who’d not given the subject much thought, the question “What is ‘economics,’” they might answer something like:
“Um, economics is about getting rich;”
Or “it’s about making money;”
Or “the haves and the have-nots;”
Or “what banks do;”
Or “buying and selling;”
Or, “making stuff and consuming it;”
Or, as the famous Saturday Night Live character Father Guido Sarducci explained in his “five-minute university,” economics is solely about “supply and demand.”
And in their way, each of those answers is partially right.
But they also fall short of fully capturing the field’s scope and potential.
It is Straightforward Defining Other Sciences; Not so Economics
It is fairly easy for us to precisely define most sciences.
Physics is the study of matter and energy, and how they interact in the universe.
Chemistry, like physics, also studies matter, but with a focus on its elements and compounds.
Biology is the study of living organisms.
Medicine is the science of the health of those living organisms, and curing the diseases and illness which may afflict them
But what about a definition of economics? With economics, experts have not yet agreed on a precise, comprehensive definition of the field.
If you asked an undergraduate economics major to define the field, just after he or she had taken their first, introductory course, they would likely respond: “Economics is the study of how societies allocate scarce resources.”
For this “scarcity based” approach is currently a leading consensus definition.
However, this has not always been the consensus definition of economics.
In fact, over the two hundred and fifty years of the field’s modern history, the definition of the field has changed again and again.
Some Historical Definitions of Economics
Here are several definitions of economics that have appeared at one time or another over the field’s history.
“The great affair, we always find, is to get money.”
Adam Smith, The Wealth of Nations, 1776
“Political economy [is} the science which treats of wealth.”
Jean Baptiste Say, A Treatise on Political Economy, 5th ed., 1826
“Political Economy is a science which teaches, or professes to teach, in what manner nations may be made rich.”
John Stuart Mill, Essays on Some Unsettled Questions of Political Economy, 1829-30.
“Political-Economy professes to teach, or to investigate, the nature of Wealth, and the laws of its production and distribution.”
John Stuart Mill, Principles of Political Economy, 1848.
“Economy is a calculus of pleasure and pain.”
William Stanley Jevons, The Theory of Political Economy, 1871.
“Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of well-being.”
Alfred Marshall, Principles of Economics, 8th ed., 1920.
“Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.”
Lionel Robbins, An Essay on the Nature & Significance of Economic Science, 2d ed. 1945.
“Economics is the study of how scarce resources are allocated among alternative uses.”
Walther Nicholson and Christopher Snyder, Microeconomic Theory 10th ed., 2008.
“ Economics is the study of how societies choose to use scarce productive resources that have alternative uses, to produce commodities of various kinds, and to distribute them among different groups.”
Paul Samuelson and William Nordhaus, Economics 19th ed., 2010.
“Economics is the science that deals with the allocation of limited resources to satisfy unlimited human wants.”
David Besanko and Ronald Braeutigam, Microeconomics 4ed., 2011
“Economics is the study of choice under conditions of scarcity.”
Robert Hall and Marc Lieberman, Microeconomics. Principles & Applications, 2013
“Economics is the study of how society manages its scarce resources.”
- Gregory Mankiw, Principles of Economics, 9th ed., 2021
“Economics can be defined in a few different ways. It’s the study of scarcity, the study of how people use resources and respond to incentives, or the study of decision-making. It often involves topics like wealth and finance, but it’s not all about money.”
Economics is “the study of how people interact with each other and with their natural surroundings in providing their livelihoods, and how this changes over time.”
“Economics is what economists do.”
Attributed to Jacob Viner.
Wealth, Behavior, Choice, Scarcity
In his classic text of 1874, Elements of Pure Economics, the French economist Leon Walras observed that, “a satisfactory definition of political-economy is still wanting.”
Walras’s observation is as valid today as it was in 1874.
This sample of definitions points to a certain malleability, lack of exactitude, and ambiguity in the way economists have historically defined their profession.
Still, there is a certain evolution of thought at work here.
The entries by Smith, Mill and Say, for example, belong to what economic historians call the field’s “classical” period. Then, the analytical focus was mainly on wealth, and the unit of analysis was on countries. Today, this is known as “macroeconomics.”
The entries by Jevons and Marshall mark the transition to “neoclassical” economics. Here, the unit of analysis migrated away from entire nations, and towards individual consumers, households, and companies. The analytical focus evolved away from “wealth,” and towards human behavior, and what influences our choices and decisions-making. Today, this is called “microeconomics.”
For example, in Jevons’ famous declaration that “Economy is a calculus of pleasure and pain,” the economic unit making that calculus is an individual consumer.
Marshall flat-out declares that economics is about individual people seeking out the “material requisites of well-being.”
The 1945 entry by Lionel Robbins is particularly relevant. For it marks the moment when the notion of “scarcity” was inserted into the definition of economics, and there it has taken up residence to this day.
The Opportunity in Inexactitude
Another way to look at the inexactitude in the definition of economics is as an invitation, not a shortcoming.
Further, in its way, this lack of precision is also understandable; at the end of the day, the object of study in economics is we people, with all of our beautiful, ever-evolving complexity.
Thus, rather than undefined, we can think of the field of economics as vast, ripe for new explorations, and with enormous potential to be of human service.
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