Meaning and scope of Economics

MEANING OF ECONOMICS

Economics has very many definitions. There are a variety of modern definitions of economics. Some of the differences may reflect evolving views of the subject or different views among economists.

Below are some definitions of economics given by some Economists. The earliest definitions were in terms of wealth or material welfare.

1. Adam smith (1776): He is recognised as “the father of economics for he laid the foundation of economics as a discipline. He defined what was then called political economy as “an inquiry into the nature and causes of the wealth of nation”
2. John Stuart Mill (1844): He defined economics as “the practical science of production and distribution of wealth”.
3. Alfred Marshall (1890): He looked at economics as the study of mankind in the ordinary business of life. It enquires how he gets his income and how he uses it. Thus, it is on the one side, the study of wealth and on the other and more important side, a part of the study of man.
4. B Say (1803): Distinguishing the subject from its public – policy uses defines it as the science of production, distribution, and consumption of wealth.
5. C Pigou: According to him, economics is the science of materials welfare. He is interested in consumption which is an aspect of welfare economics.
6. Davenport: He defined economics as the science that treat phenomena from the standpoint of price. He was interested in exchange. To him, anything that has money value (or exchange value) should come within the framework of economics.
7. Professor Lionel Robbins (1932): He developed what has been termed the most commonly accepted current definition of the subject.

He defines economics as’ the science which studies human behaviour as a relationship between ends and scare means which have alternative uses’. It is analytical, and is the most scientific and most embracing. Briefly stated, it shows that:

• Economics is a social science since it studies human behaviour
• Human wants are unlimited
• They are limited resources with which to satisfy the unlimited wants
• Scarce resources are capable of being put to alternative uses.

NOTE: Robbin’s definition should be given if one is asked to define economics in SSCE

THE SCOPE OF ECONOMICS

Despite disagreements over what should be the appropriate definition of economics, economists agree that:

1. Economics is a social science which studies human behaviour or man’s economic activities in relation to production, exchange, distribution and consumption of goods and services.

Production deals with creating utility. Production is the creation of wealth in the form of goods and the provision of services which satisfy human wants.

Exchange refers to giving out something in return for another thing.

Distribution in the strict economic sense is a branch of economics which deals with what determines the share of National income received by those who supply factors of production.

Consumption refers to the process of using up resources in order to satisfy human wants and includes eating food, wearing shoes, riding a bicycle, reading a newspaper etc.

2. Economics deals with how people react to economics situations, and how they behave while engaged in their daily economics activities.
3. Economics deals with the administration of scarce resources in society
4. Economics deals with ʻwhat isʾ ʾwhat wasʾ orʻ what will be and not what ought to beʾ. In other words, Economics is not normative, but a positive science.
5. Economics studies the working or functioning of the economics institution and process such as banks, international economics organisations, etc. and their role.

WHY WE STUDY ECONOMICS

1. A study of economics is necessary since it is primarily concerned with the use of scarce resources to satisfy unlimited want.
2. A study of economics helps the individual to build up a body of economics principles and equips him the tools of understand current issues and problems confront society.
3. A study of economics helps the individual to contribute his quota towards increasing the well-being of society.
4. A study of economics enables the individual to understand the economic policies of government
5. Economics assist planners in planning for development
6. Economics helps us to solve the basic economics problems of what to produce, how to produce and for whom to produce.
7. It assists the producer in the marketing of his productions
8. A study of economics makes the individual employable
9. Economics assists planners in planning for development.

QUESTION (POST ANSWER BELOW FOR EVALUATION AND DISCUSSION):

1. Define Economics
2. Describe the nature and scope of economics
3. To economist, all are things are scarce. Discuss