Economics is the social science that studies how humans make decisions facing scarcity, production, distribution, and consumption of goods and services. These can be individual decisions, family decisions, business decisions, or societal decisions.

Economists analyze problems differently than do other disciplinary experts. The main tools economists use are economic theories or models. A theory is not an illustration of the answer to a problem. Rather, a theory is a tool for determining the answer. We can organize societies as traditional, command, or market-oriented economies. Most societies are a mix. The last few decades have seen globalization evolve as a result of growth in commercial and financial networks that cross national borders, making businesses and workers from different economies increasingly interdependent.

The economic way of thinking provides a useful approach to understanding human behavior. Economists make the careful distinction between positive statements, which describe the world as it is, and normative statements, which describe how the world should be. Even when economics analyzes the gains and losses from various events or policies, and thus draws normative conclusions about how the world should be, the analysis of economics is rooted in a positive analysis of how people, firms, and governments actually behave, not how they should behave.

Index of main topics

  • Definition of economy
    • Political economy
  • Economic systems
  • Definitions of goods and services

Branches of economics

  • Behavioural economics
  • Ecological economics
  • Environmental economics
  • Health economics
  • Information economics
  • International economics
  • Labor economics
  • Macroeconomics
  • Microeconomics
  • Monetary economics
  • Demographic economics
  • Public finance
  • Urban economics
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