Economics

Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyses what's viewed as basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyses the economy as a system where production, distribution, consumption, savings, and investment expenditure interact, and factors affecting it: factors of production, such as labour, capital, land, and enterprise, inflation, economic growth, and public policies that have impact on these elements.


Other broad distinctions within economics include those between positive economics, describing "what is", and normative economics, advocating "what ought to be";^[5] between economic theory and applied economics; between rational and behavioural economics; and between mainstream economics and heterodox economics.^[6]


Economic analysis can be applied throughout society, including business,^[7] finance, cybersecurity,^[8] health care,^[9] engineering^[10] and government.^[11] It is also applied to such diverse subjects as crime,^[12] education,^[13] the family,^[14] feminism,^[15] law,^[16] philosophy,^[17] politics, religion,^[18] social institutions, war,^[19] science^[20] and the environment.^[21]

Criticism

Economics has been subject to criticism that it relies on unrealistic, unverifiable, or highly simplified assumptions, in some cases because these assumptions simplify the proofs of desired conclusions.^[176] For example, the economist Friedrich Hayek claimed that economics (at least historically) used a scientistic approach which he claimed was "decidedly unscientific in the true sense of the word, since it involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed".^[177] Latter-day examples of such assumptions include perfect information, profit maximization and rational choices, axioms of neoclassical economics.^[178] Such criticisms often conflate neoclassical economics with all of contemporary economics.^[179][180] The field of information economics includes both mathematical-economical research and also behavioural economics, akin to studies in behavioural psychology, and confounding factors to the neoclassical assumptions are the subject of substantial study in many areas of economics.^{[181][182][183]}


Prominent historical mainstream economists such as Keynes^[184] and Joskow observed that much of the economics of their time was conceptual rather than quantitative, and difficult to model and formalize quantitatively. In a discussion on oligopoly research, Paul Joskow pointed out in 1975 that in practice, serious students of actual economies tended to use "informal models" based upon qualitative factors specific to particular industries. Joskow had a strong feeling that the important work in oligopoly was done through informal observations while formal models were "trotted out ex post". He argued that formal models were largely not important in the empirical work, either, and that the fundamental factor behind the theory of the firm, behaviour, was neglected.^[185] Deirdre McCloskey has argued that many empirical economic studies are poorly reported, and she and Stephen Ziliak argue that although her critique has been well-received, practice has not improved.^[186] The extent to which practice has improved since the early 2000s is contested: although economists have noted the discipline's adoption of increasingly rigorous modeling,^[187][188] other have criticized the field's focus on creating computer simulations detached from reality, as well as noting the loss of prestige suffered by the field for failing to anticipate the Great Recession.^[189]


Economics has been derogatorily dubbed "the dismal science", first coined by the Victorian historian Thomas Carlyle in the 19th century. It is often stated that Carlyle gave it this nickname as a response to the work of Thomas Robert Malthus, who predicted widespread starvation resulting from projections that population growth would exceed the rate of increase in the food supply. However, the actual phrase was coined by Carlyle in the context of a debate with John Stuart Mill on slavery, in which Carlyle argued for slavery; the "dismal" nature of economics in Carlyle's view was that it "[found] the secret of this Universe in 'supply and demand', and reduc[ed] the duty of human governors to that of letting men alone"."^[31]