Defining Economics

The disagreements in Economics started right from the time people were trying to define the subject. There is no universally accepted definition. Each of the following have enjoyed their hey-days:

• WEALTH DEFINITIONS OF ECONOMICS:

 Adam Smith, known as the Father of Economics (Imagine having such an indisciplined child!) gave the following definition:

“the study of nature and causes of generating of wealth of a nation”

J.S.Mill, another heavyweight of the Classical era had somewhat similar views:

“practical science of production and distribution of wealth”

Malthus, also thought the same, but looked at at the science of wealth with some cynicism:

“Man is motivated by self Interest only. The desire to collect wealth never leaves him till he goes into the grave”

The WEALTH Definitions were OK, but happened to exclude concepts such as welfare, even though Mill explicitly included the problem of distribution. A lot depended on how “wealth” was defined, for it needn’t be only monetary wealth after all.

• WELFARE DEFINITION OF ECONOMICS:

Alfred Marshall, another classical guy, gave the following definition:

“study of mankind in the ordinary business of life; it examines that part of individual and social actions which is closely connected with the attainment and with the use of material requisites of well being”

Marshall significantly broadened the scope of the subject by his definition.

• SCARCITY DEFINITION OF ECONOMICS

Lionel Robbins, quite a latecomer as compared to Smith and Mill (he was born 108 years after Smith’s death), gave a definition that was quite well received by his contemporaries for its pointed clarity and lack of value judgment :

“a science which studies human behavior as a relationship between ends and scarce means which have alternative uses”

People went ecstatic about this one for its preciseness and technical nature. Economists have refused to be looked down upon by the physics guys since then.

If “ends”, “scarce means”, “alternative uses” have stumped you with their ambiguity, here’s a brief clarification:

Ends: These are our goals/aims/objectives.

Means: The money (or any other resource) we use to reach the “ends”

Scarce means which have Alternative uses:  Means are always few, even if you are Bill Gates. You will still have to deal with scarcity: perhaps of time.  It’s always possible to make your bank balance look small in comparison to a number n+1, where “n” is your bank balance.  There are always so many things you can do with the cash (or your time), that you have to choose one thing over the other. Economists insist that even when the choice is between letting your cash stay in your account or buying something out of it, it is still a choice between alternative “uses”, yes, not doing anything with your cash is also “using it to not do anything”. 

• GROWTH AND EFFICIENCY DEFINITION OF ECONOMICS

Samuelson gave the following definition:

“Economics is the study of how people and society end up choosing, with or without the use of money, to employ scarce productive resources that could have alternative uses, to produce various commodities and distribute them for consumption now or in the future among various persons and groups in society”

Samuelson’s view has been pretty much in vogue in recent years, as it includes the concepts of distribution, welfare (with the reference to society) and also inter temporal choice.

Are the “experts” actually even talking about the same subject if they are defining it differently? You can never be sure!

Which of the definitions do you like the best?

You can add you own to the list too! Go ahead and tell us what is economics according to you.

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