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{{Italic title}}

==In the beginning==

'''''How Not To Die: Discover the Foods Scientifically Proven to Prevent and Reverse Disease''''' is a book by [[Michael Greger]], M.D. with [[Gene Stone]], published in 2015. <ref>{{cite web |last1=Minger |first1=Denise |title=How Not to Die by Dr. Michael Greger: A Critical Review |url=https://www.healthline.com/nutrition/how-not-to-die-review |website=[[Healthline]] |language=en |date=21 May 2017}}</ref>

Although discussions about production and distribution have a [[History of Economics|long history]], economics in its modern sense is conventionally dated from the publication of [[Adam Smith]]'s ''[[The Wealth of Nations]]'' in 1776. In this work Smith defines the subject in practical terms:

:Political economy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects: first, to supply a plentiful revenue or product for the people, or, more properly, to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign.

Smith referred to the subject as '[[political economy]]', but that term was gradually replaced in general usage by 'economics' after 1870.

== Areas of economics==

Areas of economics may be classified in various ways, but an [[economy]] is usually analyzed by use of ''microeconomics'' or ''macroeconomics''.

===Microeconomics===

{{main|Microeconomics}}

Microeconomics examines the economic behavior of [[Agent (economics)|agents]] (including businesses and households) and their interactions through individual markets, given scarcity and [[government regulation]]. Within microeconomics, [[general equilibrium]] theory aggregates across ''all'' markets, including their movements and interactions toward equilibrium.

== Notes ==

===Macroeconomics===

{{Reflist}}

{{main|Macroeconomics}}

Macroeconomics examines an economy as a whole "top down" with a view toward explaining the levels and interactions of broad aggregates such as [[measures of national income and output|national income and output]], [[employment]], and [[inflation]] and subaggregates like total consumption and investment spending and their components, including effects of [[monetary policy]] and [[fiscal policy]]. Since at least the 1960s, macroeconomics has been characterized by further integration of micro-based modeling of sectors, including [[rational expectations|rationality]] of players, [[Efficient market hypothesis|efficient use]] of market information, and [[imperfect competition]].<ref>[[Yew-Kwang Ng|Ng, Yew-Kwang ]] (1992). "Business Confidence and Depression Prevention: A Mesoeconomic Perspective," ''American Economic Review'' 82(2), pp. 365-371. [http://links.jstor.org/sici?sici=0002-8282%28199205%2982%3A2%3C365%3ABCADPA%3E2.0.CO%3B2-4&size=LARGE&origin=JSTOR-enlargePage]</ref> This has addressed a long-standing concern about inconsistent developments of the same subject.<ref name="Hashem"> Howitt, Peter M. (1987). "macroeconomic relations with microeconomics".{{cite book | title=[[The New Palgrave: A Dictionary of Economics]], pp. 273-75| publisher=Macmillan and Stockton| ___location=London and New York| id=ISBN 0-333-37235-2}}</ref> Analysis of [[Economic growth|long-term determinants]] of national income across countries has also greatly expanded.

== See also ==

=== Related fields, other distinctions, and classifications===

* [[Dean Ornish]]

Recent developments closer to microeconomics include [[behavioral economics]] and [[experimental economics]]. Fields bordering on other [[social sciences]] include [[economic geography]], [[economic history]], [[public choice]], [[JEL classification codes#Other special topics (economics) JEL: Z Subcategories|cultural economics]], and [[institutional economics]].

* [[Joel Fuhrman]]

* [[Caldwell Esselstyn]]

== External links ==

Another division of the subject distinguishes two types of economics. [[Positive economics]] ("what is") seeks to explain economic phenomena or behavior. [[Normative economics]] ("what ought to be," often as to public policy) prioritizes choices and actions by some set of criteria; such priorities reflect value judgments, including selection of the criteria.

* [https://drgreger.org/ Official website of Michael Greger]

{{DEFAULTSORT:How Not To Die: Discover the Foods Scientifically Proven to Prevent and Reverse Disease}}

Another distinction is between ''mainstream economics'' and ''heterodox economics''. One broad characterization describes [[mainstream economics]] as dealing with the "rationality-individualism-equilibrium nexus" and [[heterodox economics]] as defined by a "institutions-history-social structure nexus."

Category:American non-fiction books]]

Category:2015 non-fiction books]]

Category:Health and wellness books]]

The [[JEL classification codes]] of the [[Journal of Economic Literature]] provide a comprehensive, detailed way of classifying and searching for economics articles by subject matter. An alternative classification of often-detailed entries by mutually-exclusive categories and subcategories is ''[[The New Palgrave: A Dictionary of Economics]]'' (1987).<ref name="Palgrave">{{cite book | title=[[The New Palgrave: A Dictionary of Economics]]| first=John| authorlink=John Eatwell| coauthors=Milgate, Murray, and Newman, Peter, ed.| date=1987| publisher=Macmillan and Stockton| ___location=London and New York| id=ISBN 0-333-37235-2 and ISBN 0-935859-10-1}}</ref>

{{health-book-stub}}

===Mathematical and quantitative methods ===

Certain mathematical and quantitative methods may be used in analysis, modeling, or description of economic problems and data. These methods include the following.

====Mathematical economics====

{{main|Mathematical economics}}

Mathematical economics refers to application of mathematical methods to represent economic theory or analyze [[Mathematical problem|problems]] posed in economics. It uses such methods as [[calculus]] and [[matrix algebra]]. Expositors cite its advantage in allowing formulation and derivation of key relationships in an [[economic model]] with clarity, generality, rigor, and simplicity.<ref>[[Gerard Debreu|Debreu, Gerard]] (1987). "mathematical economics," ''The [[New Palgrave: A Dictionary of Economics]]'', v. 3, pp. 401-03.</ref> For example, [[Paul Samuelson]]'s book [[Foundations of Economic Analysis]] (1947) identifies a common mathematical structure across multiple fields in the subject.

====Game theory====

{{main|Game theory}}

Game theory is often described as a branch of [[applied mathematics]] and [[economics]] that studies situations where multiple players make [[decision]]s in an attempt to maximize their returns. The essential feature is that it provides a formal modeling approach to social situations in which decision makers interact with other agents. Game theory generalizes maximization approaches developed to analyze markets, such as the [[supply and demand]] model. The field of game theory came into being with the [[1944]] classic ''[[Theory of Games and Economic Behavior]]'' by [[John von Neumann]] and [[Oskar Morgenstern]]. A major center for the development of game theory was the [[RAND|RAND Corporation]] where it helped to define [[nuclear strategies]]. Game theory has found significant applications in many areas outside economics as usually construed, such as [[ethics]], [[political science]], and [[evolutionary theory]].<ref>[[Robert Aumann|Aumann, R.J.]] (1987). "game theory ," ''[[The New Palgrave: A Dictionary of Economics]]'', v. 2, pp. 460-82.</ref>

====Econometrics====

{{main|Econometrics}}

Econometrics applies mathematical and [[statistical methods]] to analyze [[economic data|data]] related to economic models. For example, a theory may hypothesize that a person with more education will on average earn more income than person with less education holding everything else equal. Econometric estimates can estimate the magnitude and [[statistical significance]] of the relation. Econometrics can be used to draw quantitative generalizations. These include testing or refining a theory, describing the relation of past variables, and forecasting future variables.<ref> Hashem, M. Pesaren (1987). "econometrics", [[The New Palgrave: A Dictionary of Economics]], v. 2, p. 8.</ref>

====Computational economics====

{{main|Computational economics}}

Computational economics encompasses both computational economic modeling and the computational solution of analytically and statistically formulated economic problems.

====National accounting====

{{main|National accounts}}

National accounting (more generally, social accounting) is a method for summarizing economic activity of a nation (or other geographic entity). The [[national accounts]] are double-entry accounting systems that provide detailed underlying measures of such information. National accounting includes measurement of [[National Income and Product Accounts|national income and product]], which allows tracking the performance of an economy and its components through business fluctuations or longer periods of time. It also includes measurement of the [[Capital (economics)|capital stock]] and [[wealth (economics)|wealth]] of a nation, [[international economics|international capital flows]], and [[Input-output model|input-output]] relationships.<ref name="Ruggles"> Ruggles, Nancy D. (1987). "social accounting". {{cite book | title=[[The New Palgrave: A Dictionary of Economics]]date=| pages=v. 3, 377| publisher=Macmillan and Stockton| ___location=London and New York| id=ISBN 0-333-37235-2}}</ref>

===Selected fields===

====Industrial organization====

{{main|Industrial organization}}

Industrial organization studies the strategic behavior of firms, the structure of markets and their interactions. The common market structures studied include [[perfect competition]], [[monopolistic competition]], various forms of [[oligopoly]], and [[monopoly]].

====Information economics====

{{main|Information economics}}

Information economics examines how information (or a lack of it) affects economic decision-making. Its key focus is the concept of [[information asymmetry]], where one party has more or better information than the other. The existence of information asymmetry gives rise to problems such as [[moral hazard]], and [[adverse selection]]. The economics of information has relevance in many fields, including [[insurance]] and [[contracts]].

====Labour economics====

{{main|Labour economics}}

Labour [[economics]] seeks to understand the functioning of the [[market]] and dynamics for [[labour (economics)|labour]]. '''Labour markets''' function through the interaction of workers and employers. Labour economics looks at the suppliers of labour services (workers), the demanders of labour services (employers), and attempts to understand the resulting pattern of wages, employment, and income.

It is an important subject because unemployment is a problem that affects the public most directly and severely. [[Full employment]] (or reduced unemployment) is a goal of many modern governments.

====Public finance====

{{main|Public finance}}

Public finance is the field of economics that deals with budgeting the revenues and expenditures of a [[public sector]] entity, usually government. The subject addresses such matters as [[tax incidence]] (who really pays a particular tax), cost-benefit analysis of government programs, effects on [[economic efficiency]] and [[income distribution]] of different kinds of spending and taxes, and fiscal politics. The latter describes public-sector behavior analogously to microeconomics, involving interactions of self-interested voters, politicians, and bureaucrats.<ref>[[Richard Musgrave|Musgrave, R.A.]] (1987). "public finance," ''The [[New Palgrave: A Dictionary of Economics]]'', v. 3, pp. 1055-60.</ref>

====International economics====

{{main|International trade|International finance}}

International trade is the exchange of goods and services across international boundaries or territories. International finance examines the flow of capital across international borders, and the role of [[exchange rate]]s in facilitating this trade. The trade of goods, services and capital between countries is a major impetus behind and effect of [[globalization]].

====Financial economics====

{{main|Financial economics}}

Financial economics is concerned with the allocation of financial resources, in an uncertain (or [[risk|risky]]) environment. Thus, its focus is on the operation of [[financial market]]s, the pricing of [[financial instrument]]s, and the [[capital structure|financial structure]] of companies. While it has traditionally been considered a part of economics, today, [[finance]] has established itself as a discipline in its own right.

====Economic analysis of law====

{{main|Law and Economics}}

[[Image:Becker.jpg|thumb|right|[[Gary Becker|Becker]], one of the [[Chicago school (economics)|Chicago School]], runs a blog with economist and lawyer [[Richard Posner]].<ref>{{cite web|url=http://www.becker-posner-blog.com/ |title=The Becker-Posner Blog |accessdate=2007-02-03}}</ref>]]

Economic analysis of law is an approach to legal theory that incorporates and applies the methods and ideas of [[economics]] to law. The discipline arose partly out of a critique of trade unions and U.S. [[antitrust]] law. The most influential proponents, such as [[Richard Posner]] and [[Oliver Williamson]] and the so-called [[Chicago school (economics)|Chicago School]] of economists and lawyers including [[Milton Friedman]] and [[Gary Becker]], are generally advocates of [[deregulation]] and [[privatisation]], and are hostile to state regulation or what they see as restrictions on the operation of [[free market]]s.<ref>S.M. Jakoby, ''Economic Ideas and the Labour Market'', 53</ref>

====Development economics====

{{main|Development economics}}

Development economics examines the economic aspects of the development process in developing countries with a focus on methods of promoting [[economic growth]].

====Environmental economics====

{{main|Environmental economics}}

Environmental economics is concerned with environmental issues, in particular the concept of [[externality|externalities]], which can lead to [[market failure]].

====Welfare economics====

{{main|Welfare economics}}

Welfare economics is a branch of economics that uses microeconomic techniques to simultaneously determine the allocational efficiency of a macroeconomy and the [[income distribution]] associated with it. It attempts to maximize the level of [[social welfare]] by examining the economic activities of the individuals that comprise society.

==Economic concepts==

===Supply and demand===

{{main|Supply and demand}}

[[Image:Supply-demand-right-shift-demand.svg|thumb|right|The [[supply and demand]] model describes how prices vary as a result of a balance between product availability and demand. The graph depicts an increase (that is, right-shift) in demand from D₁ to D₂ along with the consequent increase in price and quantity required to reach a new equilibrium point on the supply curve (S).]]

In [[microeconomics|microeconomic theory]], the supply-and-demand [[model (economics)|model]] is intended to explain or predict the price and quantity sold in a perfectly competitive [[market]]. It also serves as a standard for other market structures and for other theoretical approaches.

For a given market of a [[Good (economics and accounting)|commodity]], ''demand'' shows the quantity that the prospective buyer(s) would be prepared to purchase at each unit price of the good. Demand is often represented as a table or a graph relating price and quantity demanded (see boxed figure). [[consumer theory|Demand theory]] describes each consumer as "[[rational choice theory|rationally]]" choosing the ''most preferred'' quantity of each good, given income, prices, etc. A term for this is 'constrained [[utility]] maximization' (with income as the "constraint" on demand). Here, 'utility' refers to the (hypothesized) preference relation for each respective consumer.<ref>Böhm, Volker and Haller, Hans (1987). "demand theory," ''The [[New Palgrave: A Dictionary of Economics]]'', v. 1, p. 785.</ref>. It indicates the quantity that the consumer would be willing to buy at each price.

The '''law of demand''' states that, in general, price and quantity demanded in a given market are inversely related. In other words, the higher the price of a product, the less of it people would be willing buy of it (other things [[ceteris paribus|unchanged]]). There are other factors that could affect demand, for example an increase in income. These can be represented by a ''shift'' of the demand curve, as in the figure.

''Supply'' is the relation between the price of a good and the quantity available for sale from suppliers (such as producers) at that price. Supply is often represented as a table or a graph relating price and quantity ''supplied''. Producers are hypothesized to be profit-maximizing, attempting to produce the amount of goods that will bring them the greatest profit. The '''law of supply''' states that price and quantity supplied are directly proportional (other things unchanged). In other words, the higher the price at which the good can be sold, the more of it producers will supply. The higher price makes it profitable to increase production. The model predicts that for given supply and demand, price and quantity will stabilize at the price that makes quantity supplied equal quantity demanded. This is at the intersection of the two curves in the graph above, [[market equilibrium]]. At a price below equilibrium, there is a shortage of quantity supplied compared to quantity demanded. This pulls the price up. At a price above equilibrium, there is a surplus of quantity supplied compared to quantity demanded. This pushes the price down.

For a given quantity of a good, the price point on the demand curve indicates the ''value'', or [[marginal utility]], to consumers for that unit of output. That value measures what consumers are willing to pay for the corresponding unit of the good. The price point on the supply curve measures a certain kind of ''cost'', called ''[[marginal cost]]'', for production of that unit of output. It is the amount producers would have to receive to keep profits from declining with the additional output. The price in equilibrium is determined by supply and demand. In a [[perfect competition|perfectly competitive market]], supply and demand equate cost and value "at the margin," that is for the last unit produced to reach equilibrium.<ref name="Hicks">{{cite book | title=[[Value and Capital]]| last=Hicks| first=John Richard| authorlink=John Hicks| date=1939| publisher=Oxford University Press. 2nd ed., paper, 2001| ___location=London| id=ISBN 978-0198282693}}</ref>

Supply and demand can also be used to model the [[Distribution (economics)|distribution of income]] to the [[factors of production]], including labour and capital, through ''factor markets''. In a labour market for example, the quantity of labour employed and the price of labour (the wage rate) are modeled as set by the [[Labour economics#Neoclassical microeconomic model — Demand|demand for labour]] (from business firms etc. for production) and supply of labour (from workers).

Supply and demand are used to explain how prices and quantity are set in a given market. Their usefulness is not that they explain every type of market but they are a point of reference for all types of markets and can be generalized to explain the behavior of a [[market economy]], for example the general [[price level]] and the [[Real GDP|quantity of total output]] in [[macroeconomics]].

===Price===

{{main|Price}} {{main|Real versus nominal value}}

[[Image:Moneybillscoins3.jpg|thumb|right|[[Exchange rate]]s are determined by the relative supply and demand of different [[currency|currencies]] &mdash; an important issue in [[international trade]]]]

In order to measure the ebb and flow of supply and demand, a measurable value is needed. The oldest and most commonly used is ''price'', or the going rate of exchange between buyers and sellers in a market. Price theory, therefore, charts the movement of measurable quantities over time, and the relationship between price and other measurable variables. In [[Adam Smith]]'s ''[[Wealth of Nations]]'', this was the trade-off between price and convenience.<ref name="smith" /> A great deal of economic theory is based around prices and the theory of [[supply and demand]]. In economic theory, the most efficient form of communication comes about when changes to an economy occur through price, such as when an increase in supply leads to a lower price, or an increase in demand leads to a higher price.

In many practical economic models, some form of "price stickiness" is incorporated to model the fact that prices do not move fluidly in many markets. Economic policy often revolves around arguments about the cause of "economic friction", or price stickiness, and which is, therefore, preventing the supply and demand from reaching equilibrium. Another area of economic controversy is about whether price measures the value of a good correctly. In mainstream market economics, where there are significant scarcities not factored into price, there is said to be an [[externality|externalization]], which is a cost or benefit to actors other than the buyer and seller, of which many examples exist, including pollution (a cost to others) and education (a benefit to others). Market economics predicts that scarce goods which are under-priced because of externalities are over-consumed (See [[social cost]]), and that scarce goods that are over-priced are under-consumed. This leads into [[public good]]s theory. Governments often tax and otherwise restrict the sale of goods that have negative externalities and subsidize or otherwise promote the purchase of goods that have positive externalities in an effort to correct the distortion in price caused by these externalities.

[[Neoclassical economics]] is characterized by maximization (leisure time, wealth, health, and other sources of happiness - all commonly reduced to the concept of [[utility]]) subject to constraints. These constraints - or scarcity - inevitably define a trade-off. For example, one can have more money by working harder, but less time (there are only so many hours in a day, so time is scarce). One can have more radishes only at the expense of, for example, fewer carrots (you only have so much land on which to grow food - land is scarce). Scarcity is defined as: when the price is zero, the quantity demanded exceeds the quantity supplied. Price is a measure of relative scarcity. If all other market variables are held constant. When the price is rising, this indicates the commodity is becoming relatively scarcer. When the price is falling, this indicates the commodity is becoming relatively less scarce. Adam Smith considered, for example, the trade-off between time, or convenience, and money. He discussed how a person could live near town, and pay more for rent of his home, or live farther away and pay less, "paying the difference out of his convenience".<ref name="smith" />

===Marginalism===

{{main|Marginalism}}

In [[marginalism|marginalist economic theory]], the price level is determined by the [[marginal cost]] and [[marginal utility]]. The price of all goods will be the cost of making the last one that people will purchase, and the price of all the employees in a company will be the cost of hiring the last one the business needs. Marginalism looks at decisions based on "the margins", what the cost to produce the next unit is, versus how much it is expected to return in profit. When the marginal return of an action reaches zero, the action stops. Marginal utility is how much more happiness or use a person receives from a purchase in contrast with buying less. Marginal rewards are often subject to [[diminishing returns]]: Less reward is obtained from more production or consumption. For example, the 10th bar of chocolate that a person consumes does not taste as good as the first, and so brings less marginal utility.

Marginalism became increasingly important in economic theory in the late 19th century, and is a tool which is used to analyze how economic systems will react. Marginal cost of production divides [[cost]]s into "fixed" costs which must be paid regardless of how many of a commodity are produced, and "variable costs". The marginal cost is the variable cost of the last unit. Marginalism states that when the profit from the next unit will be zero, that unit will not be produced. This is often termed the [[marginal revolution]] in economic thought. The marginalist theory of price level runs counter to the classical theory of price being determined by the amount of labor congealed in a commodity.

==Economic reasoning==

Economics relies on rigorous styles of argument. Economic method has several interacting parts:

* Formulation of testable [[model (economics)|models]] of economic relationships, for example, the relationship between the general level of prices and the general level of employment. This includes observable forms of economic activity, such as [[money]], consumption, buying, selling, and prices.

* Collection of [[economic data]]. The data may include values of commodity prices and quantities, for example, the cost to hire a worker for a week, or the quantity purchased of a particular service.

* Production of economic statistics. Taking the data collected, and applying the model being used to produce a representation of economic activity. For example, the "general price level" is a theoretical idea common to macroeconomic models. The specific inflation rate involves taking measurable prices, and a model of how people consume, and calculating what the "general price level" is from the data within the model. For example, suppose that diesel fuel costs 1 euro a litre: to calculate the price level would require a model of how much diesel an average person uses, and what fraction of their income is devoted to this, but it also requires having a model of how people use diesel, and what other goods they might substitute for it.

* Reasoning within economic models. This process of reasoning (see the articles on [[informal logic]], [[logical argument]], [[fallacy]]) sometimes involves advanced mathematics. For instance, an established (though possibly unexamined) tradition among economists is to reason about economic variables in two-dimensional graphs in which curves representing relations between the axis variables are parameterized by various indices. A good example of this type of reasoning in [[Keynesian]] [[macroeconomics]] is the still commonly-used [[IS/LM model]]. [[Paul Samuelson]]'s treatise ''[[Foundations of Economic Analysis]]'' examines the class of assertions called ''operationally meaningful theorems'' in economics, which are those that can be conceivably refuted by empirical data.<ref name="Foundations">{{cite book | title=[[Foundations of Economic Analysis]], Enlarged Edition| last=Samuelson| first=Paul| authorlink=Paul Samuelson| date=1947, 1983| pages=4| publisher=Harvard University Press| ___location=Boston| id=ISBN 978-0674313019}}</ref> As usual in science, the conclusions obtained by reasoning have a [[predictive power|predictive]] as well as confirmative (or dismissive) value. An example of the predictive value of economic theory is a prediction as to the effect of current deficits on interest rates 10 years into the future. An example of the confirmative value of economic theory would be confirmation (or dismissal) of theories concerning the relation between marginal tax rates and the deficit.

Economics typically employs two types of equations:

(1) Identity equations are used for defining how certain economic variables are calculated or related to each other. Identity equations are tautological in that the purpose is to define rather than to explain. An example is the value of [[national output]], the price level times the quantity of output '''P•Q'''. Another example is [[Irving Fisher]]'s [[equation of exchange]] '''P•Q = M•V'''. This relates the value of national output to the [[money supply]] and velocity of money. Given values of the other three terms in the equation, velocity '''V''' can be calculated.

(2) Descriptive equations are used to ''explain'' the behaviour of the economic agent(s) examined. For example, in the [[quantity theory of money]], velocity in the equation of exchange is hypothesized to give a positive [[Qualitative economics|qualitative]] relation between the money supply '''<math>M </math>''' and value of output or the price level. The point is not that '''V''' is a constant but that it is stable enough for changes in the money supply to help explain changes in the value of output or the price level.

Economists often formulate very simple models in order to isolate the impact of just one variable changing, for example, the ''ceteris paribus'' ("other things equal") assumption, meaning that all other things are assumed not to change during the period of observation: for example, "If the price of movie tickets rises, ''ceteris paribus'' the demand for popcorn falls." It is, however, possible with the use of econometric methods to determine one relationship while removing much of the noise caused by other variables.

Formal modeling has been adapted to some extent by all branches of economics. It is motivated by general principles of consistency and completeness. It is not identical to what is often referred to as [[mathematical economics]]; this includes, but is not limited to, an attempt to set [[microeconomics]], in particular general equilibrium, on solid [[mathematics|mathematical]] foundations.

Some reject mathematical economics. The [[Austrian School]] of economics believes that anything beyond simple logic is likely unnecessary and inappropriate for economic analysis. In fact, the entire empirical-deductive method sketched in this section may be rejected outright by that school.{{Fact|date=May 2007}}

Still, much of modern economics employs the [[hypothetico-deductive method]] to explain real-world phenomena. Towards this end, economics has undergone a massive formalization of its concepts and methods. This has included extension of microeconomic methods to analysis of seemingly non-economic areas, sometimes called [[economic imperialism]].<ref>Lazear, Edward P. (2000). "Economic Imperialism,"

''The Quarterly Journal of Economics'', 115(1) , pp. [http://links.jstor.org/sici?sici=0033-5533%28200002%29115%3A1%3C99%3AEI%3E2.0.CO%3B2-W&size=LARGE&origin=JSTOR-enlargePage 99]-146 (via [[JSTOR]]).</ref>

==History of economics==

{{main|History of economics}}

Economic thought may be roughly divided into three phases: '''premodern''' ([[ancient Greece|Greek]], [[ancient Rome|Roman]], [[Arab]]), '''early modern''' ([[mercantilist]] and [[physiocrat]]) and '''modern''' (since [[Adam Smith]] in the late 18th century). Systematic economic theory has been developed mainly since the birth of the [[modern era]]. [[Joseph Schumpeter]] specifically credits the development of the scientific study of economics to the Late [[Scholastics]], particularly those of 15th and 16th century [[Spain]] (see his ''History of Economic Analysis'').

===Classical economics===

Publication of [[Adam Smith]]'s ''[[The Wealth of Nations]]'' in 1776, has been described as "the birth of economics as a separate discipline."<ref name="Blaug">[[Mark Blaug|Blaug, Mark]] (1985). "The Social Sciences: Economics". {{cite book | title=The New Encyclopaedia Britannica| date=| pages=v. 27, p. 392| publisher=The New Encyclopaedia Britannica| ___location=Chicago| id=ISBN 0852294239}}</ref> The approach that Smith helped initiate was later called '[[classical economics]]'. It included such notables as [[Thomas Malthus]], [[David Ricardo]], and [[John Stuart Mill]] writing from about 1770 to 1870.<ref>Blaug, Mark (1987). "classical economics". [[The New Palgrave: A Dictionary of Economics]], v. 1, pp. 434-35 Blaug notes less widely used datings and uses of 'classical economics', including those of [[Marx]] and [[Keynes]].</ref>

====Theories of value: classical and Marxist====

{{main|Labour theory of value}}

[[Image:Us-gold-certificate-1922.jpg|thumb|right|[[Representative money]] like this 1922 [[United States|US]] $100 gold note could be exchanged by the bearer for its face value in [[gold]].]]

Value theory was important in classical theory. Smith wrote that the "real price of every thing ... is the toil and trouble of acquiring it" as influenced by its scarcity. Smith maintained that, with rent and profit, other costs besides wages enter the price of a commodity.<ref>Smith, Adam (1776). [http://www.bartleby.com/10/105.html/ The Wealth of Nations], Bk. 1, Ch. 5, 6.</ref> Other classical economists presented variations on Smith, termed the '[[labour theory of value#The theory’s development|labour theory of value]]'. In the work of [[Karl Marx]], labour was fundamental. He argued that non-labour income under capitalist production was a diversion from labour, although concealed by appearances of "vulgar" political economy.<ref>Vianello, Fernando (1987). "labour theory of value," ''The New Palgrave: A Dictionary of Economics'', v. 3, pp. 111-12.</ref><ref>Baradwaj Krishna (1987). "vulgar economy," ''The New Palgrave: A Dictionary of Economics'', v. 3, p. 831.</ref>

===Neoclassical economics===

A body of theory later termed '[[neoclassical economics]]' or '[[marginalism#The Marginal Revolution|marginalist economics]]' formed from about 1870 to 1910. The term 'economics' was popularized by neoclassical economists such as [[Alfred Marshall]] as a substitute for the earlier term '[[political economy]]'. Neoclassical economics sytematized [[supply and demand]] as joint determinants of market price and quantity produced. It dispensed with the [[labor theory of value]] inherited from classical econonomics in favor of a [[marginal utility]] theory of value on the demand side and costs on the supply side.<ref name=>Campos, Antonietta (1987). "marginalist economics". {{cite book | title=The New Palgrave: A Dictionary of Economics| date=| pages=v. 3, 320| publisher=Macmillan and Stockton| ___location=London and New York| id=ISBN 0333372352}}</ref>

===Other schools and approaches===

There have been different and competing schools of economic thought pertaining to capitalism from the late 18th Century to the present day. Important schools of thought include [[Manchester capitalism|Manchester school]], [[Austrian school]], [[Marxian economics]], and [[Chicago school (economics)|Chicago school]].

Within macroeconomics there is, in general order of their appearance in the literature; [[classical economics]], [[Keynesian economics]], neo-classical synthesis, [[post-Keynesian economics]], [[monetarism]], [[new classical economics]], and [[supply-side economics]]. New alternative developments include [[evolutionary economics]], [[dependency theory]], and [[world systems theory]].

===Historic definitions of economics===

This section extends the discussion of the definitions of Economics at the beginning of the article.

===== Wealth definition =====

The earliest definitions of political economy were simple, elegant statements defining it as the study of wealth. The first scientific approach to the subject was inaugurated by [[Aristotle]], whose influence is still recognized, [[inter alia]], today by the [[Austrian School]]. [[Adam Smith]], author of the seminal work ''[[The Wealth of Nations]]'' and regarded by some as the 'father of economics', defines economics simply as "The science of wealth."<ref name="smith">[[Adam Smith|Smith, Adam]] (1776). ''[http://www.bartleby.com/10/ Wealth of Nations]'', edited by C. J. Bullock. Vol. X. The Harvard Classics. New York: P.F. Collier & Son, 1909–14; Bartleby.com, 2001.</ref> Smith offered another definition, "The Science relating to the laws of production, distribution and exchange."<ref name="smith" /> Wealth was defined as the specialization of labor which allowed a nation to produce more with its supply of labor and resources. This definition divided Smith and Hume from previous definitions which defined wealth as gold. Hume argued that gold without increased activity simply serves to raise prices.<ref name="Hume"> [[David Hume|Hume, David]]; Copley, Stephen and Edgar, Andrew, editors (1998). "Of the Balance of Trade" {{cite book | title=Selected Essays| url=http://www.amazon.com/dp/0192836218/| last=| first=| authorlink=| coauthors=| date=| publisher=Oxford University Press, USA| ___location=New York| pages=188 |id=ISBN 978-0192836212}}</ref>

[[John Stuart Mill]] defined economics as "The practical science of production and distribution of wealth"; this definition was adopted by the ''[[Concise Oxford English Dictionary]]'' even though it does not include the vital role of consumption. For Mill, wealth is defined as the stock of useful things.<ref name="Mill">{{cite book | title=Principles of Political Economy with Some of Their Applications to Social Philosophy| url=http://books.google.com/books?vid=OCLC04904974&id=rsqrZx89WO4C&dq=editions:OCLC00334987| last=Mill| first=John Stuart| authorlink=John Stuart Mill| date=1848| pages=1, 8| publisher=C.C. Little & J. Brown| ___location=Boston| id=ISBN 978-0192836212}}</ref>

Definitions in terms of wealth emphasize production and consumption. The accounting measures usually used measure the pay received for work and the price paid for goods, and do not deal with the economic activities of those not significantly involved in buying and selling (for example, retired people, beggars, peasants). For economists of this period, they are considered non-productive, and non-productive activity is considered a kind of cost on society. This interpretation gave economics a narrow focus that was rejected by many as placing wealth in the forefront and man in the background; [[John Ruskin]] referred to political economy as a "bastard science"<ref name="Ruskin1">[[John Ruskin|Ruskin, John]] (1860). {{Cite web|url=http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/ruskin/ruskin|title=Ad Valorem|accessdate=2007-03-17|publisher=Cornhill Magazine|year= |author= |work=}} Reprinted as ''Unto This Last'', 1862</ref> and "the science of getting rich."<ref name="Ruskin2">[[John Ruskin|Ruskin, John]] (1860). {{Cite web|url=http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/ruskin/ruskin|title=The Veins of Wealth|accessdate=2007-03-17|publisher=Cornhill Magazine |year=|author= |work=}} Reprinted as ''Unto This Last'', 1862</ref>

==== Welfare definition ====

Later definitions evolved to include human activity, advocating a shift toward the modern view of economics as primarily a study of man and of human welfare, not of money. [[Alfred Marshall]] in his 1890 book ''Principles of Economics'' wrote, "Political Economy or Economics is a study of mankind in the ordinary business of Life; it examines that part of the individual and social action which is most closely connected with the attainment and with the use of material requisites of well-being."<ref name="Marshall">{{cite book | title=Principles of Economics| url=http://www.econlib.org/library/Marshall/marP.html| last=Marshall| first=Alfred| authorlink=Alfred Marshall| date=1890| pages=8th ed., 1920, I.I.1| publisher=Macmillan and Co., Ltd | ___location=London}}</ref>

==Schools of thought==

{{main|Economic schools of thought}}

===Classical economics===

{{main|Classical economics}}

Classical economics, also called [[political economy]], was the original form of mainstream economics of the 18th and 19th centuries. Classical economics focuses on the tendency of markets to move to equilibrium and on objective theories of value. Neo-classical economics differs from classical economics primarily in being [[utilitarian]] in its value theory and using marginal theory as the basis of its models and equations. Marxist economics also descends from classical theory.

===Marxian economics===

{{main|Marxian economics}}

Marxian economics derives from the work of [[Karl Marx]], this school focuses on the [[labor theory of value]] and what Marx considered to be the exploitation of labour by capital. Thus, in Marxian economics, the labour theory of value is a method for measuring the exploitation of labour in a capitalist society, rather than simply a theory of price.<ref name="Roemer"> [[John Roemer|Roemer, J.E.]] (1987). "Marxian Value Analysis". {{cite book | title=[[The New Palgrave: A Dictionary of Economics]]| authorlink=| date=| pages=v. 3, 383| publisher=Macmillan and Stockton| ___location=London and New York| id=ISBN 0333372352}}</ref><ref name="Mandel">[[Ernest Mandel|Mandel, Ernest]] (1987). "Marx, Karl Heinrich". {{cite book | title=The New Palgrave: A Dictionary of Economics| date=| pages=v. 3, 372, 376| publisher=Macmillan and Stockton| ___location=London and New York| id=ISBN 0333372352}}</ref>

===Keynesian economics===

{{main|Keynesian economics}}

This school has developed from the work of [[John Maynard Keynes]] and focused on macroeconomics in the short-run, particularly the rigidities caused when prices are fixed. It has two successors. [[Post-Keynesian economics]] is an alternative school - one of the successors to the Keynesian tradition with a focus on [[macroeconomics]]. They concentrate on macroeconomic rigidities and adjustment processes, and research micro foundations for their models based on real-life practices rather than simple optimizing models. Generally associated with [[Cambridge, England]] and the work of [[Joan Robinson]] (see [[Post-Keynesian economics]]). [[New-Keynesian economics]] is the other school associated with developments in the Keynesian fashion. These researchers tend to share with other [[Neoclassical economics|Neoclassical]] economists the emphasis on models based on micro foundations and optimizing behavior but focus more narrowly on standard Keynesian themes such as price and wage rigidity. These are usually made to be endogenous features of these models, rather than simply assumed as in older style Keynesian ones (see [[New-Keynesian economics]]).

===Neoclassical economics===

{{main|Neoclassical economics}}

is reflected in an early and lasting [[neoclassical synthesis]] with Keynesian macroeconomics,<ref>[[John Hicks|Hicks, J.R.]] (1937). "Mr. Keynes and the 'Classics': A Suggested Interpretation," ''Econometrica'', 5(2), pp. [[http://links.jstor.org/sici?sici=0012-9682%28193704%295%3A2%3C147%3AMKAT%22A%3E2.0.CO%3B2-E&size=LARGE&origin=JSTOR-enlargePage 147]-159 (via [[JSTOR]]).</ref> and in the [[supply and demand]] model of markets. Is usually used as a starting point for [[microeconomics]]. It represent incentives and costs as playing a pervasive role in shaping [[decision making]]. An immediate example of this is the [[consumer theory]] of individual demand, which isolates how prices (as costs) and income affect quantity demanded.

Neoclassical economics is often referred as ''orthodox economics'' whether by its critics or sympathizers. The notion of [[opportunity cost]] is a refinment of neoclassical analyis. It expresses an implied relationship between competing alternatives. Such costs, considered as prices in a market economy are used for analysis of [[economic efficiency]] or for predicting responses to disturbances in a market. In a [[planned economy]] comparable [[shadow price]] relations must be satisfied for the efficient use of resources, as first demonstrated out by the Italian economist [[Enrico Barone]].

Modern mainstream economics builds on [[neoclassical economics]] but with many refinements that either supplement or generalize earlier analysis, such as [[econometrics]], [[game theory]], analysis of [[market failure]] and [[imperfect competition]], and the [[neoclassical model]] of [[economic growth]] for analyzing long-run variables affecting [[national income]].

===Other schools===

*'''[[Austrian economics]]''': This school focuses on the role of the entrepreneur creating temporary market power and being the drive for economic growth.

*'''[[Complexity economics]]''': One of the more recent schools of thought in modern economics (dating from the late 1970s early 1980s), complexity economics views economic systems as complex adaptive systems rather than as closed equilibrium systems. Some of the earliest studies in this new field were done by researchers at the Santa Fe Institute in New Mexico, USA.

*'''[[Agent-Based Computational Economics]] (ACE)''': ACE is the computational study of economic processes modeled as dynamic systems of interacting agents. Here "agent" is broadly interpreted as a bundle of data and methods representing a social, biological, or physical entity constituting part of a computationally constructed "virtual world."

*'''Eclectic Economists''': The term 'eclectic' means selecting and using what seems best from various sources, systems or schools of thought. Eclectic economists tend to economize to get an optimal result for the problem at hand. The assumption of utility can for example be used, not to imply that people really have such a utility, but as an efficient approximation. Such economists might be 'main stream' or neoclassical in one publication and do political economy in another publication.

Further famous schools or trends of thought referring to a particular style of economics practiced at and disseminated from well-defined groups of academicians that have become known worldwide, include the [[Chicago school (economics)|Chicago School]], the [[Freiburg School]], the [[School of Lausanne]] and the [[Stockholm school (economics)|Stockholm school]].

== Economic theory criticisms ==

===Criticisms of welfare and scarcity definitions of economics===

The definition of economics in terms of material being is criticized as too narrowly materialistic. It ignores, for example, the non-material aspects of the services of a doctor or a dancer. A theory of wages which ignored all those sums paid for immaterial services was incomplete. Welfare could not be quantitatively measured, because the [[marginal value|marginal]] significance of money differs from rich to the poor (that is, $100 is relatively more important to the well-being of a poor person than to that of a wealthy person). Moreover, the activities of production and distribution of goods such as alcohol and tobacco may not be conducive to human welfare, but these scarce [[Good (economics)|goods]] do satisfy innate human wants and desires.

[[Marxist]] economics still focuses on a welfare definition. In addition, several critiques of mainstream economics begin from the argument that current economic practice does not adequately measure welfare, but only monetized activity, which is an inadequate approximation of welfare.

The definition of economics in terms of [[scarcity]] suggests that resources are in finite supply while wants and needs are infinite. People therefore have to make choices. Scarcity too has its critics. It is most amenable to those who consider economics a pure science, but others object that it reduces economics merely to a valuation theory. It ignores how values are fixed, prices are determined and national income is generated.{{Fact|date=December 2006}} It also ignores unemployment and other problems arising due to abundance. This definition cannot apply to such [[John Maynard Keynes|Keynesian]] concerns as cyclical instability, [[full employment]], and [[economic growth]].

The focus on scarcity continues to dominate [[neoclassical economics]], which, in turn, predominates in most academic economics departments. It has been criticized in recent years from a variety of quarters, including [[institutional economics]] and [[evolutionary economics]] and [[surplus economics]].

=== Is economics a science? ===

One of the marks of a [[science]] is the use of a [[scientific method]] and the ability to establish [[hypotheses]] and make [[predictions]] which can then be tested with data and where the results are repeatable and demonstrable to others when the same conditions are present. In a number of applied fields in economics experimentation has been conducted: this includes the sub-fields of [[experimental economics]] and [[consumer behavior]], focused on experimentation using human subjects; and the sub-field of [[econometrics]], focused on testing hypotheses when data are not generated via controlled experimentation. However, in a way similar to what happens in other [[social sciences]], it may be difficult for economists to conduct certain formal experiments due to moral and practical issues involved with human subjects.

The status of social sciences as an empirical [[science]] has been a matter of debate in the 20th century, see [[Positivism dispute]].<ref name="Popper">Critical examination of various positions on this issue can be found in [[Karl R. Popper]]'s ''[http://www.amazon.com/dp/0415065690/ The Poverty of Historicism]'' (1957). London and New York: Routledge; reprint ed. 1988 (paper). [http://en.wikipedia.org/w/index.php?title=Special:Booksources&isbn=9780415065696 ISBN 9780415065696]</ref> Some philosophers and scientists, most notably [[Karl Popper]], have asserted that no empirical hypothesis, proposition, or theory can be considered scientific if no observation could be made which might contradict it, insisting on strict [[falsifiability]]. Critics allege that economics cannot always achieve Popperian falsifiability, but economists point to many examples of controlled experiments that do exactly this. <ref>The Economics of Fair Play. Karl Sigmund, Ernst Fehr and Martin A. Nowak in Scientific American, Vol. 286, No. 1, pages 82-87; January 2002</ref><ref>The Nature of Human Altruism. Ernst Fehr and Urs Fischbacher in Nature, Vol. 425, pages 785-791; October 23, 2003.</ref><ref>Andrew Oswald, ‘‘Happiness and Economic Performance,’’ Economic Journal 107 (1997): p. 1815–1831.</ref>

While economics has produced theories that correlate with observations of behavior in society, economics yields no natural laws or universal constants due to its reliance on non-physical arguments. This has led some critics, like Dick Richardson, Ph.D., Professor of Integrative Biology at the [[University of Texas at Austin]], to argue economics is not a science.<ref name="Richardson">{{Cite web|url=http://www.sbs.utexas.edu/resource/onlinetext/Definitions/economicsNOTscience.htm|title=Economics is NOT Natural Science! (It is technology of Social Science.)|accessdate=2007-03-17|publisher=R.H. Richardson|year=[[2001-01-28]]|author=Richardson, Dick}}</ref> In general, economists reply that while this aspect may present serious difficulties, they do in fact test their hypotheses using [[statistical methods]] such as [[econometrics]] and data generated in the real world.<ref name="Roth">{{Cite web|url=http://kuznets.fas.harvard.edu/~aroth/econsci.html|title=Is Economics a Science? (Of course it is...) |accessdate=2007-03-17|publisher=Alvin E. Roth|year=1999|author=Roth, Alvin E.|work=Unpublished letter to the Economist}} Roth is the Gund Professor of Economics and Business Administration, Harvard Economics Department and [[Harvard Business School]]</ref> The field of [[experimental economics]] has seen efforts to test at least some predictions of economic theories in a simulated laboratory setting &ndash; an endeavor which earned [[Vernon Smith]] the [[Nobel Prize in Economics|Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel]] in [[2002]].

Although the conventional way of connecting an [[economic model]] with the world is through [[econometric]] analysis, economist and professor [[Deirdre McCloskey]], through what is known as the [[McCloskey critique]], cites many examples in which professors of [[econometrics]] were able to use the same data to both prove and disprove the applicability of a model's conclusions. She argues the vast efforts expended by economists on analytical equations is essentially wasted effort. [[Econometry|Econometricians]] have replied that this would be an objection to any science, and not only to economics. Critics of McCloskey's critique reply by saying, among other things, that she ignores examples where economic analysis is conclusive and that her claims are ilogical. <ref>[http://www.econjournalwatch.org/pdf/CorrespondenceDecember2004.pdf CORRESPONDENCE - Econ Journal Watch, Volume 1, Number 3, December 2004, pp 539-545]</ref>

=== Criticism of assumptions ===

Certain models used by economists within economics have been criticized, sometimes by other economists, for their reliance on unrealistic, unobservable, or unverifiable assumptions. One response to this criticism has been that the unrealistic assumptions result from abstraction from unimportant details, and that such abstraction is necessary in a complex real world, which means that rather than unrealistic assumptions compromising the epistemic worth of economics, such assumptions are essential for economic knowledge. One study has termed this explanation the "abstractionist defense" and concluded that that this "abstractionist defense" does not invalidate the criticism of the unrealistic assumptions.<ref name="Rappaport">{{Cite web|url=http://www.econmethodology.org/jem/issues/v3n2.html |title=Abstraction and unrealistic assumptions in economics|accessdate=2007-03-17|publisher=Journal of Economic Methodology|year=December 1996|author=Rappaport, Steven |work=Volume 3 Number 2}}</ref> However, it is important to note that while one school does have a majority in the field, there is far from a consensus on all economic issues and multiple alternative fields claim to have more empirically-justified insights.

===="Assumptions" and Observations====

Many criticims of economics revolve around the belief that the fundamental claims of economics are unquestioned assumption without empirical evidence. Many economists reply giving examples of concepts that used to be considered "axioms" in economics and which have turned out to be consistent with empirical observation (see three examples below), however agreeing that these observations reveal that the original assumption was probably oversimplified.

A few examples of such concepts that according to many economists have evolved from "assumptions" to empirically-based are:

*Rationality = Self-Interest: This refers to the common axiom or belief shared by many mainstream economists that rationality implies self-interest and vice-versa. This does not, however, preclude altruism. Altruism can be viewed as a case in which the individual's self-interest includes doing good for others. Other views claim that this does not leave much room for altruism, and in fact discourages it, rather like a global [[prisoner's dilemma]] .i.e.: ''If "rational" people are not altruistic, then I shouldn't be altruistic either'', ad infinitum. However, this "axiom" has since been subjected to multiple experiments and even altruism, when all social pressures are considered, could be modeled as a form of self-interest. <ref>The Economics of Fair Play. Karl Sigmund, Ernst Fehr and Martin A. Nowak in Scientific American, Vol. 286, No. 1, pages 82-87; January 2002</ref><ref>The Nature of Human Altruism. Ernst Fehr and Urs Fischbacher in Nature, Vol. 425, pages 785-791; October 23, 2003.</ref>

*Well-Being = Consumption: This refers to the axiom or belief shared by some mainstream economists that human beings are happy when they consume, and unhappy when not consuming. Added to the other common assumption of insatiability, this implies human beings can never remain happy. Although this original belief is over-simplified (and perhaps not representative of most economists actual beliefs today), empirical observations have now confirmed a relationship between sense of well-being and such factors as income <ref>Andrew Oswald, ‘‘Happiness and Economic Performance,’’ Economic Journal 107

(1997): p. 1815–1831.</ref>

*Atomism: This refers to the belief shared by some mainstream economists that human beings are atomistic, ie.their preferences are independent. This is another simplification both of the economy and of the specific beliefs of the economists. Agent-based modeling and experimental economics produce results that are indicative of this theory.

A common defense of the above axioms was that they made the problem tractable. However, after specific details of this have been observed through economics research in a variety of controlled experiments, the original assumptions have been further refined and are no longer technically "axioms" in [[mainstream economics]].

===Criticism of contradictions===

Economics is a field of study with [[Economic schools of thought|various schools and currents of thought]]. As a result, there exists a considerable distribution of opinions, approaches and theories. Some of these reach opposite conclusions or, due to the differences in underlying assumptions, contradict each other.<ref name="Dissension">{{cite journal | author=Frey, Bruno S.; Pommerehne, Werner W.; Schneider, Friedrich; Gilbert, Guy | title=Consensus and Dissension Among Economists: An Empirical Inquiry| journal=The American Economic Review| year=December 1984| volume=74| issue=5| page=986-994| url=http://links.jstor.org/sici?sici=0002-8282%28198412%2974%3A5%3C986%3ACADAEA%3E2.0.CO%3B2-E&size=LARGE}} Accessed on [[2007-03-17]].</ref><ref name="Frey">{{Cite web|url=http://www.deirdremccloskey.com/articles.php|title=Rhetorical Criticism in Economics|accessdate=2007-03-17|publisher=www.deirdremccloskey.org|year=1983–2005|author=[[Deirdre McCloskey|McCloskey, Deirdre N. ]]|work=Articles by Deirdre McCloskey}} McCloskey is Distinguished Professor of Economics, History, English, and Communication at the [[University of Illinois at Chicago]].</ref><ref>McCloskey, D. N. (1985) ''[http://books.google.com/books?id=WtcKAAAACAAJ The Rhetoric of Economics]'' [http://links.jstor.org/sici?sici=0022-0515(198306)21:2%3C481:TROE%3E2.0.CO;2-R ] (Madison, University of Wisconsin Press).</ref>

===Criticism in other topics===

Criticism on several topics in economics can be found elsewhere, in both general and specialized literature. See, for example: [[General equilibrium#Unresolved problems in general equilibrium|general equilibrium]], [[Pareto efficiency#Criticisms|Pareto efficiency]], [[Marginalism#Criticisms of marginalism|marginalism]], [[Behavioral economics#Criticisms of behavioral finance|behavioral finance]], [[Behavioral economics#Criticisms of behavioral economics|behavioral economics]], [[feminist economics]], [[Keynesian economics#Criticism|Keynesian economics]], [[Monetarism#The current state of monetary theory|monetarism]], [[Neo-classical economics#Criticisms of neoclassical economics|neo-classical economics]], [[Endogenous growth theory#Critics|endogenous growth theory]], [[Comparative advantage#Criticism|comparative advantage]], [[Kuznets curve#Criticism of Kuznets Curve|Kuznets curve]], [[Laffer curve#Critiques of the Laffer Curve|Laffer curve]], [[economic sociology]], [[Agent-Based Computational Economics|agent-based computational economics]], [[et al.]].

===Economics and politics===

Economics per se, as a social science, do not stand on the political acts of any government or other decision-making organization, however, many [[policymaker]]s or individuals holding highly ranked positions that can influence other people's lives are known for arbitrarily use a plethora of economic theory concepts and [[rhetoric]] as vehicles to legitimize [[agenda]]s and [[value systems]], and do not limit their remarks to matters relevant to their responsibilities.<ref>[http://www.faculty.english.ttu.edu/carter/5377/ Dr. Locke Carter (Summer 2006 graduate course) - Texas Tech University]</ref> The close relation of economic theory and practice with [[politics]]<ref>[http://www.wider.unu.edu/publications/rps/rps2006/rp2006-148.pdf Research Paper No. 2006/148 Ethics, Rhetoric and Politics of Post-conflict Reconstruction How Can the Concept of Social ContractHelp Us in Understanding How to Make Peace Work? Sirkku K. Hellsten, pg. 13]</ref> is a focus of contention that may shade or distort the most unpretentious original tenets of economics, and is often confused with specific social agendas and value systems.<ref>[http://www.stratapub.com/Hahn/preface.htm Political Communication: Rhetoric, Government, and Citizens, second edition, Dan F. Hahn]</ref> For example, it is possible associate the U. S. promotion of democracy by force in the 21st century, the 19th century work of [[Karl Marx]] or the [[cold war]] era debate of [[capitalism]] vs. [[communism]], as issues of economics. Although economics makes no such value claims, this may be one of the reasons why economics could be perceived as not being based on empirical observation and testing of hypothesis. As a social science, economics tries to focus on the observable consequences and efficiencies of different economic systems without necessarily making any value judgments about such systems, for example, examine the economics of authoritarian systems, egalitarian systems, or even a caste system without making judgments about the morality of any of them.

==== Ethics and economics ====

The relationship between economics and [[ethics]] is complex. Many economists consider normative choices and value judgments, like what needs or wants, or what is good for society, to be political or personal questions outside the scope of economics. Once a person or government has established a set of goals, however, economics can provide insight as to how they might best be achieved.

Others see the influence of economic ideas, such as those underlying modern [[capitalism]], to promote a certain system of values with which they may or may not agree. (See, for example, [[consumerism]] and [[Buy Nothing Day]].) According to some thinkers, a theory of economics is also, or implies also, a theory of [[moral reasoning]].<ref>E.F.Schumacher: Small is Beautiful, Economics as if People matter.</ref>

The premise of [[ethical consumerism]] is that one should take into account ethical and environmental concerns, in addition to financial and traditional economic considerations, when making buying decisions.

On the other hand, the rational allocation of limited resources toward public welfare and safety is also an area of economics. Some have pointed out that not studying the best ways to allocate resources toward goals like health and safety, the environment, justice, or disaster assistance is a sort of willful ignorance that results in less public welfare or even increased suffering.<ref>Douglas Hubbard, "How to Measure Anything: Finding the Value of Intangibles in Business", John Wiley & Sons, 2007.</ref> In this sense, it would be unethical not to assess the economics of such issues. In fact, federal agencies in the United States routinely conduct economic analysis studies toward that end.

==== Effect on society ====

Some would say that [[market form]]s and other means of distribution of scarce goods, suggested by economics, affect not just their "desires and wants" but also "needs" and "habits". Much of so-called economic "choice" is considered involuntary, certainly given by social [[conditioning]] because people have come to expect a certain [[quality of life]]. This leads to one of the most hotly debated areas in economic policy, namely, the effect and efficacy of welfare policies. [[Libertarians]] view this as a failure to respect economic reasoning. They argue that redistribution of wealth is morally and economically wrong. [[Socialists]] view it as a failure of economics to respect society. They argue that disparities of wealth should not have been allowed in the first place. This led to both 19th century [[labor economics]] and 20th century [[welfare economics]] before being subsumed into [[human development theory]].

The older term for economics, ''[[political economy]]'', is still often used ''instead of'' "economics", especially by certain economists such as [[Marxists]]. The use of this term often signals a basic disagreement with the terminology or paradigm of market economics. Political economy explicitly brings social political considerations into economic analysis and is therefore openly [[normative]], although this can be said of many economic recommendations as well, despite claims to being [[positive]]. Some mainstream universities (many in the [[United Kingdom]]) have a "political economy" department rather than an "economics" department.

Marxist economics generally denies the trade-off of time for money. In the Marxist view, concentrated control over the means of production is the basis for the allocation of resources among classes. Scarcity of any particular physical resource is subsidiary to the central question of power relationships embedded in the means of production.

== Notes ==

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