Economics as a social science (1.1.1)

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  • Created on: 11-10-19 12:48
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  • Economics as a Social Science (1.1.1 and 1.1.2)
    • The Scientific Method
      • A scientist puts forward a hypothesis which is capable of refuation
        • The scientist gather evidence to support or refute the theory
          • Scientist accepts, modifies or refutes the theory
            • Theories which gain universal acceptance are called laws
    • Economics-the science
      • It is not often possible to establish control groups/ set up experiment in environments which enable to be varied whilst other factors are kept constant
        • Economists take data from everyday life where the variables can change at any given time period
          • Becomes difficult to decide whether the evidence supports or refutes particular hypotheses
            • Economists may come to different conclusions from the same set of data as their interpretations may vary
              • Economics studies human behaviour which cannot be reduced to scientific laws
                • It's hard to understand/predict behaviour of individuals-economics is based on the study of groups pof individuals
              • Insufficient data to make firm predictions because variables may change altering the course of events
    • Theories and Models
      • An economic theory can be expressed in words
        • An economic model requires great precision in their specification and therefore expressed in mathematical terms
          • Theories and models are a simplification of reality (simple) = useful
          • The ceteris paribus (all other things being equal) assumption is used when building models; the theory relies on external factors not changing or interfering
    • Positive and Normative
      • Positive economics deals with statements of 'fact' which can be supported or refuted by evidence.
        • Statements about the future can be positive but economists have to wait for evidence
      • Normative economics deals with value judgements; cannot be proved or disproved by evidence
        • Opinions about how economies and markets should work
      • Normative economics typically contains positive economics


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