Is economics a science or an art.

 Q. Explain whether Economics is a science or art or both.

Ans. Economics is a discipline that has debated either a science or an art or combination of both. Whether Economics is a science or art or both can be concluded by studying the characteristics of science and an art separately. 

Is Economics a Science?: In order to find out whether Economics is a science or not, it is necessary to know:

(i) What is a Science?

(ii) What are the features of Science?

(i) What is Science? The term ‘Science’ has its origin in term ‘Scientia’ of Latin language. It means ‘to know’. Science is a systematic body of knowledge concerning the relationship between causes and effects of a particular phenomenon. In science, we must collect, classify and analyse the facts systematically. In Economics also one collects, classifies and analyses economic facts systematically.

(ii) Features of Science: A detailed study of features of Science will testify that Economics is a science.

(1) Collection of Facts: In science, initially, facts concerning a subject are collected. In Economics also facts relating to economic activities are collected. For example, an economist observes that when price rises, ordinarily demand contracts. Similarly, when a consumer buys more of a commodity then the utility of that commodity diminishes. In this way, an economist collects facts relating to economic activities.

(2) Measurement: In science, efforts are made to measure the facts. To do so, facts are classified and properly presented. In Economics also facts are measured. An economist will try to measure as to how much demand has contracted due to rise in the price. If there is unemployment in the country, what is the number of unemployed? What is the rate at which the national income of the country is growing? In the measurement of these facts an economist seeks help of mathematics, statistics and econometrics. The facts which are collected in written form are called data.

(3) Explanation: After collecting and measuring the facts, the same are sought to be explained. In other words, the same are put to systematic study. By establishing a relationship between cause and effect of a fact, economic laws are framed. For example, on the basis of study of mutual relationship between change in price and consequent change in demand, law of demand is formulated.

(4) Verification or Validity of the Laws: The final feature of science is to verify the validity of scientific laws by applying the same to real life situation. In other words, whether the same conforms to the facts or not. Every science seeks to verify the validity of its laws. This verification can be done in two ways: (i) If a law is based on real assumptions, it is considered valid. (u) If the prediction based on any law comes true, then also it is taken as valid. Experiments are also conducted in this respect. Validity of economic laws is also subject to verification. For instance, many laws of Economics like, law of diminishing returns, law of diminishing marginal utility, etc. are treated as valid because the same apply to real life situations.

It is evident from the above discussion that Economics is a science. However, some scholars do not consider Economics as a science because laws of Economics are not as exact and universal as the laws of physics and chemistry are. In fact their disagreement is not justified. According to Seligman, there are two broad branches of science: (i) Social science, and (ii) Natural science. Economics is a social science as it deals with human beings, whereas physics and chemistry etc, are natural sciences as they deal with lifeless matter.

(1) Arguments in favour of Economics being a Social Science.

Following arguments may be advanced in favour of Economics being a Social science:

(i) Systematic Study: Social Science refers to that science which studies man as a member of the society. It studies those activities of such social men that are concerned with wealth. In other words, it studies mutually dependent activities regarding consumption, production, exchange, etc. of wealth. Facts relating to economic activities are collected, classified and measured. 

(2) Scientific Laws: Laws of Economics like law of demand, law of supply etc. are scientific laws. These laws establish cause and effect relationship between economic phenomenon. Law of demand states that with an increase in the price of a commodity, say Rasgullahs, its demand will contract. In this way, the law establishes relationship between change in price (that is cause) and the resultant change in demand (that is effect).

(3) Validity of Laws: Every science verifies validity of laws. If a law of is based on realistic assumptions or its predictions come true, then it will be treated as valid. Many laws of Economics like law of diminishing returns, law of diminishing marginal utility, being based on real experiences of life, are treated as valid.

It is evident from the above account that Economics is a social science. It makes a systematic study of the economic activities of the human beings on the basis of scientific laws. 

(2) Arguments against Economics being a Natural Science 

Those who believe that Economics is not a science, as a matter of fact, mean that Economics is not an exact science like that of a natural science. They put forward following arguments against Economics being a natural science.

(1) Difference among Economists: There are differences among economists with regard to most of the economic problems. On the contrary, there are very little differences among natural scientists with regard to their subject.

(2) Exact Lawsı Laws of natural science like law of gravitation of physics is an exact law in all respects. According to this law anything thrown up must come down because of gravitational pull. On the contrary, laws of Economics are not perfectly exact. For example, law of demand will be valid only if there is no change in the income, fashion, etc., of the consumer.

(3) Universal Laws: Laws of natural science are universally applicable. They hold good at all places and at all times. However, laws of Economics are not universal laws. They are not valid at all places and at all times. The same are subject to change.

(4) Verification of Truth: Natural scientists can verify the truth of the laws relating to their science in the laboratories by conducting experiments. On the basis of these laws correct predictions can be made to a large extent. But no laboratory exists to verify the correctness of economic laws. The only apparatus available with the economists to measure economic activities is money as a measuring-rod but even this measure is not exact. Value of money itself goes on changing, and so cannot serve as a dependable measure. Consequently, predictions made on the basis of economic laws prove wrong very often. It can, however, be said that compared to other social sciences, Economics is a more exact science because it possesses a measuring-rod in the form of money.

In short, it can be asserted that Economics is not a natural science but a social science.

Is Economics An Art? Whether Economics is an art or not, is yet another controversial subject among the economists. Some economists do not consider Economics to be an art. However, some are of the opinion that Economics is not only a science but also an art. 

Before taking any final decision in this regard, it is essential to know what is an art? Science is concerned with ‘knowing’ and art is concerned with ‘dong’. Art is the practical application of knowledge for achieving definitely ends.

As an art, Economics helps us in the solution of our practical problems. Its study enables us to know the best methods of achieving economic ends.

Arguments in favour of Economics being an Art.

Many economists consider Economics as an art on the following grounds:

(1) Solution of the Problem: Most of the problems of the world are economic problems. Economics can prove to be a more useful subject for the people if it can help in the solution of their economic problems. Study of Economics tells us how an economy can make efficient and optimum use of its scarce resources.

(2) Realistic Situation: Actual situation with regard to the study of Economics is that economists spend most of their time seeking solution to real economic problems like inflation, unemployment, depression, economic development etc. Economics is therefore an art. As an art Economics formulates policies designed to promote economic welfare of the people.

(3) Empirical Basis of Assumptions: (Empirical means based on direct observation or experience rather than just theory or ideas.) By dividing Economics into science and art, one can dispel doubts that arise in respect of the real nature of economic laws.

(4) Verification of Economic Theory: Study of Economics as an art facilitates verification of economic theories. It is through art that their validity can be verified. 

Arguments against Economics being an Art:

Following arguments are advanced against Economics being an art:

(1) Different nature of Science and Art: Science and art have different nature of their own. If Economics is a science then it cannot be an art. On the contrary, if it is taken as an art, it will have no claim on science.

(2) Nature of Economic Problems: Economic problems are not purely economic in nature. They are influenced by political, religious and social conditions also. It may not therefore be possible for the economists to tackle their problems purely on the basis of economic point of view.

(3) Uncertainty: If Economics is recognised as an art, then different economists will formulate different policies and suggest different solutions to different problems. Such solutions may be mutually contradictory. Consequently, an element of uncertainty will be imparted to Economics.

(4) Lack of Immediate Solution: Economics may not be made use of to seek immediate solution of economic problems. Its laws cannot be applied immediately to solve economic problems.

Conclusion: From the above analysis it can be well concluded that, Economics is both a science as well as an art. In the words of Cossa, “Science requires art, art requires science, each being complementary to each other.” Prof. Mehta, suggests that as a science it should be called ‘economics’ and as an art it should be christened as ‘economy’.

is economics science or art

Meaning, importance, limitations of Microeconomics

 Q.  What is microeconomics? Discuss the importance and limitations of microeconomics. 

Ans. MEANING OF MICROECONOMICS: The term micro has been borrowed from the Greek word, ‘Mikros’ meaning small. Under microeconomics, we study individual units, like, a Consumer, a firm, an industry, price determination of a particular commodity etc. In other words, microeconomics studies economic relationships, or economic problems at the level of an individual- an individual firm, an individual household or an individual consumer. It is concerned with determination of output and price for an individual firm or industry.

In the words of Shapiro, “Microeconomics deals with small parts of the economy.”

IMPORTANCE OF MICROECONOMICS: Importance of the study of microeconomics lies in the following:

i) Operation of an Economy: Microeconomics explains the functioning of an economy. It tells whether different constituents of economy, namely, consumers, firms, etc. are functioning efficiently or not.

ii) Prediction: Predictions are made on the basis of the theories of Microeconomics. If a cause occurs then a set of results will follow. For instance, if demand increases prices are also likely to rise.

iii) Economic Policies: Study of microeconomics helps in the formation of economic policies. 

iv) Economic welfare: Microeconomics informs us of the conditions of economic welfare. Study of microeconomics suggests how the ideal of economic welfare can be achieved.

v) Mangerial Decision: Business firms make use of microeconomics to take managerial decisions. They take these decisions on the basis of cost and demand analysis.

LIMITATIONS OF MICROECONOMICS: Following are the main limitations of microeconomics: 

i) Static: In the study of microeconomics, mostly static analysis is made use of. In it many economic variables are assumed to be constant.

ii) Wrong Conclusions: The conclusions drawn from microeconomics are in many cases not valid from the point of view of macroeconomics. For example, in microeconomics, saving is a virtue so far is individual is concerned but if it is viewed from macro angle, if the entire population begins to save more than before, then there will be fall in aggregate demand leading to fall in production and employment.

iii) Unrealistic Assumptions: This economics analysis is based on many unrealistic assumptions like prevalence of full employment and perfect competition in the economy. In real life these assumptions are not found.

iv) Limited Scope: Microeconomics has limited scope, study of many important economic policies and problems like, fiscal policy, monetary policy, inflation, unemployment, etc. is outside its scope.