Economics can have many definitions. Often, the meaning of economics depends on which economist you ask. Although in the strictest sense, economics is defined in the dictionary as:
- “The branch of knowledge concerned with the production, consumption, and transfer of wealth”; or
- “The condition of a region or group as regards material prosperity.”
However, economics as a social science can have more meanings and does not have to necessarily focus on wealth or prosperity.
This is because economics seeps into our daily lives, not only through our banking and monetary systems, but also when it comes to our fundamental understanding of human behaviour and society as a whole.
This is also reflected in the wide variety of economic specialisms that exist, including:
- Financial economics;
- Behavioural economics;
- International economics; and
- Environmental economics.
So when it comes to understanding what economics really means, and how you can benefit from studying it, there really is so much to know and learn.
That’s why it can help to have an economics tutor by your side, to help guide you through the maze that an economics curriculum can sometimes feel like. A economics teacher can be very beneficial, as he or she can provide you with a different perspective on economics, and introduce you to economic systems or concepts you may not have previously seen in your studies.
However, there’s nothing to stop you learning more about economics, its wider meaning, and current economic issues on your own as well. Below, we outline the variety of meanings that economics as a term can have, and what that means for your economics studies.
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Each Individual Has Their Own Economic Theory
A number of different economists have come up with their own definitions of what economics means for them, and their assumption about the meaning of economics can often differ to the principles held by another economist.
The original meaning of economics derives from the Greek word oikonomia, which translates to “household management.” However, the field of economics has come a long way from this rather restrictive meaning.
For example, Adam Smith in his seminal work The Wealth of Nations argued that economics and wealth are derived from an individual’s self-interest:
"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."
Smith’s definition of economics as being primarily related to wealth was shared by other economists. John Stuart Mill also believed, for example, that economics involved the study of the production and distribution of wealth.
However, since the time of classical economics, there have been plenty of definitions of economics that seek to expand on this definition. Indeed, on a more light-hearted, if somewhat derogatory note, economics has even been called the “dismal science” by Thomas Carlyle in 1849.
Although not everyone will agree with Carlyle's definition, there have been other economists that have tried to broaden the definition of their subject. For example, moving away from the notion that economics should only be associated with money or resource management, Lionel Robbins defined economics as:
“the science which studies human behaviour as a relationship between given ends and scarce means which have alternative uses.”
In the same vein as Robbins, another influential definition of economics has come from the figure of Alfred Marshall, who defined economics as “a study of mankind in the ordinary business of life.”
This definition, along with Robbins' view of the meaning of economics, highlights a more commonly held view today that economics can, and does, extend to everyday life, with its influence extending far beyond wealth. This is primarily due to the fact that later definitions of economics tend to focus on the human condition, specifically human behaviour, and how our decision-making and behaviour can have a wider impact on economic systems.
However, despite the shift in the meaning of economics towards a consideration of human behaviour and action, the fact remains that the definition of economics can have a fundamentally personal meaning to each economist, as each researcher has their own view of just how economics can impact wealth, prosperity, and society at large.
For example, if you asked Keynes to agree with Hayek’s or Friedman’s definition of economics, it’s fairly likely that he would be at odds with some of their interpretations. This is because Keynes, shaped by the belief that government intervention in the economy is sometimes necessary, would not be able to come to terms with Hayek’s or Friedman’s belief in laissez-faire policies as the best route forward for an economy.
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The Difficulty in Finding Economic Meaning
Broadly speaking, economics can be broken down into two overarching fields:
- Macroeconomics; and
These two fields are completely separate to one another, and what you learn or examine within economics will really depend on what field you’re looking at. What's more, your definition of what economics is may change depending on whether you are a specialist in microeconomics or macroeconomics.
Macroeconomics as a field looks at how the economy behaves in aggregate and what influences it.
In practice, this means that macroeconomics can comprise the study of items such as:
- Gross domestic product (GDP);
- Monetary policies; and
- Rates of employment or unemployment.
Essentially, any item that can influence how the economy behaves as a whole should fall within the scope of macroeconomic analysis.
The benefits of macroeconomics are numerous. For example, governments can make use of macroeconomic analysis to understand how best to develop their economic policies, as well as how to improve the growth of the economy or boost factors such as unemployment.
Modern macroeconomics is often associated with John Maynard Keynes. Keynes is one of the most influential economists ever, whose ideas went against previous beliefs in laissez-faire economic policies.
As the name of the term suggests, microeconomics is the polar opposite of macroeconomics. It is the study of the individual items within an economy, from people to households or companies, and the decisions and actions they take.
In particular, specialists in microeconomics are interested in how resources are managed and distributed at the individual level.
Examples of economic items falling within the microeconomics sphere are:
- Factors of production; and
- Supply and demand
In addition, relatively newer fields such as behavioural economics, which looks at how human psychology impacts our decision-making and its impact on our economic reality, fall within the realm of microeconomics.
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What Is Economics? Find Your Own Answer
As we’ve seen, the true definition of economics is often elusive. Whilst this can be frustrating for learners of this subject, both at school and at university, it can also be a liberating realisation.
This is because, in essence, you can make economics mean whatever you would like it to mean. Fundamentally, economics is so present in almost every aspect of our lives, from:
- The news that we read;
- The state of our local and global economy; and
- How we behave with one another during financial or social interactions.
As a result, you can draw inspiration and meaning from economics in the way that most appeals to you and your learning preferences.
For example, you may prefer a definition of economics that focuses solely on wealth creation or distribution. Alternatively, you may like an expanded definition of economics, and prefer to see economics as a study in the human condition and rational decision-making.
You may also find that the economic areas that interest you may be influenced by how you perceive economics. For example, if you prefer to see economics in a more traditional light, you may enjoy learning more about financial economics or even international economics, and perhaps a field such as macroeconomics would be more appealing to you.
However, if you’re more interested in the psychology behind why we behave in the way we do or why decisions in stock markets can be irrational at times, then perhaps behavioural economics is where you can derive the most meaning in your studies of economics.
Of course, if you’re struggling to navigate your way around economics, or need some assistance learning more about what the key economists of the modern era believe economics represents as a field, then you can always find some help in the form of a tutor.
An economics tutor can really help you focus your studies in economics, and help you to pinpoint what interests you about economists. What’s more, once you’ve found the niche you’re most interested in, your tutor can point you to economists that have pioneered that field, and help you to study more about their theories and ideas.
Websites such as Superprof offer a range of economics tutors, whether you’re looking for online tuition, or would prefer to work with a tutor in person. Simply enter your postcode and the subject you’d like a tutor for, and Superprof will match you with the best tutors in your area.
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