REVISITING ECONOMICS AS A SOCIAL SCIENCE

There are three strands in the development of the definition of economics. The first focuses
on wealth. In previous decades. Economics has been defined as a science of wealth getting and
wealth using. The second stresses the decision-making process. Currently, economics is defined
as a science of making choices. The third concentrates on the allocation process. In many
textbooks, economics has been defined as a social science that deals with the allocation of scarce
resources to meet the unlimited human wants.

ECONOMICS AS STUDY OF WEALTH

The earlier definition of economics as the science of wealth-getting and wealth-using implies
that the motivation of the process of wealth accumulation is the utilization of wealth for the
individual's satisfaction and society's welfare. Although the focus is on wealth, this initial
definition pertains to activities answering the (two major economic problems in any society—
production and consumption.) The intent of producing goods and services is meant for the other
forms of disposition of these produced goods and services is meant for consumption and the other
forms of disposition of these produced goods and services. Thus, economics is all about wealth
and how this wealth is being used by individuals and society at large for material survival, stability,
and development.

ECONOMICS AS STUDY OF MAKING CHOICES

The more current definition of economics as a science of making choices is consistent with
the previous definition. In everything that we do. Whether we produce or consume, whether it is
wealth-getting or wealth-using, we make decisions and these decisions are based on (alternative
choices.) In the study of economics, when we make a choice from among these alternatives, it
implies that we are foregoing or sacrificing the benefits that would have been derived from
alternatives that were not selected. Thus, in making a decision, we have to consider a major concept
in the study of economic s —opportunity cost. In everything that we do, there are costs and
sacrifices that we have to carry. As such, there is no free lunch in any activity that we execute. In
addition, in making a decision, the choice that we pursue must be based on a valuation of costs
and benefits. This means that our choice must give us additional benefits that are at least equal to
or more than the additional benefits derived from the foregone alternatives.

ECONOMICS AS STUDY OF ALLOCATION

(Consistent with the process of wealth-getting and wealth-using and the process of making
choices is the process of allocation). This section, the definition of economics will be explained
further as a social science that deals with the study of allocation of scarce resources to answer the
unlimited human wants. Although the third definition concentrates on the allocation process,
economics can be analyzed comprehensively in terms of its five key elements. There are five
elements in the definition of economics—social science, resources, human wants, scarcity and
allocation (p. 2-3)
ECONOMICS AS A SOCIAL SCIENCE

Economics is primarily a social science. (As a science it utilizes the scientific method of
inquiry from identifying the problem, proposing alternative tentative answers or hypotheses,
testing the tentative answers to the question or the problem at hand, gathering and treating the data,
and answering the question a social science, this systematic or scientific method through the
conclusion.) As a social science, this systematic or scientific method is being used in the study of
society and its components. Thus, social science can be described as the study of the various modes
and aspects of human interactions in a group as these people aspire to preserve their group as a
social unit, to make it stable, and to promote its growth, expansion, and development. (p. 3)

General Definition of Economics:

The English word economics is derived from the ancient Greek word oikonomia—meaning the
management of a family or a household.
It is thus clear that the subject economics was first studied in ancient Greece.
Emphasis on human welfare is evident in Alfred Marshall's own words: “Political Economy
or Economics is a study of mankind in the ordinary business of life; it examines that part of
individual and social action which is most closely connected with the attainment and with the use
of the material requisites of well-being.”

Alfred Marshall defines economics as “a study of men as they live and move and think in the
ordinary business of life.” He argued that economics, on one side, is a study of wealth and, on
the other, is a study of man. Economics studies only the ‘material’ part of human welfare which
is measurable in terms of the measuring rod of money.

It is the study of household management to Greek philosophers like Aristotle (384-322 BC) was
the “study of wealth” to the mercantilists in Europe between the sixteenth and eighteenth
centuries.

Adam Smith and his followers regarded economics as a science of wealth which studies the
process of production, consumption and accumulation of wealth.
To him, wealth may be defined as those goods and services which command value-
in- exchange. Economics is concerned with the generation of the wealth of nations. Economics is
not to be concerned only with the production of wealth but also the distribution of wealth. The
manner in which production and distribution of wealth will take place in a market economy is the
Smithian ‘invisible hand’ mechanism or the ‘price system’. Anyway, economics is regarded by
Smith as the ‘science of wealth.’ His emphasis on wealth as a subject-matter of economics is
implicit in his great book— ‘An Inquiry into the Nature and Causes of the Wealth of Nations or,
more popularly known as ‘Wealth of Nations’—published in 1776. (Pal, n.d.)
REFERENCE

(n.d.). Share Your Knowledge on Economics | Economics Discussion. Top 4 Definitions of

Economics (With Conclusion). Retrieved from http://www.economicsdiscussion.net/economics-
2/definitions/top-4-definitions-of-economics-with-conclusion/14134