What is economics and what do economists do?

Summary

In this introduction to economics, Dr. Pete Schuhmann explains economics as the study of dealing with scarcity and distributing resources. He differentiates between macroeconomics, focusing on national and international economies, and microeconomics, examining individual and firm decisions. Key concepts like opportunity cost and thinking at the margin are highlighted, emphasizing the use of math, statistics, and data in economic analysis. The video also touches on the broad applications of economics, the diversity of economist roles, and the importance of objectivity and critical thinking in the field.

Takeaways

• 📚 Economics is defined as the study of how people, businesses, societies, or nations deal with scarcity and distribute resources.
• 🌳 There are two main branches of economics: macroeconomics, which studies the economy at a national and international level, and microeconomics, which focuses on individual and firm-level decision-making.
• 🔍 Economists use concepts like opportunity cost to understand trade-offs and decision-making, often thinking 'at the margin' to consider incremental changes.
• 👥 Key figures in economic thought include Alfred Marshall, known for the supply and demand model, Adam Smith, who explored rational self-interest, and Milton Friedman, an advocate for free markets.
• 🔄 The circular flow model illustrates the exchange between households and businesses, with labor provided for income and wages, and goods and services exchanged for payments.
• 🌐 Economists expand their analysis to include natural systems and environmental considerations, recognizing the interplay between economic activities and the environment.
• 📊 Economists employ tools such as mathematics, statistics, and data analysis to study economic phenomena and provide useful information to decision-makers.
• 🔮 Economics involves a 'what if' approach, examining cause and effect, and assessing the costs and benefits of actions or inactions to solve problems.
• 🔬 The discipline strives for objectivity, with economists acting as analysts rather than advocates, using theory, data, and empirical results to draw conclusions.
• ⚖️ While economics shares similarities with science, it is considered inexact due to the complexity and lack of controlled experiments in economic systems.
• 🌟 Economics is a broad field with numerous sub-disciplines, ranging from environmental and ecological economics to health, education, and labor economics.

Q & A

What is the definition of economics as presented by Dr. Pete Schuhmann?

Economics is defined as the study of how people, businesses, societies, or nations deal with scarcity and distribute scarce resources.

What are the two broad branches of economics mentioned in the script?

The two broad branches of economics are macroeconomics and microeconomics.

What does macroeconomics focus on according to the script?

Macroeconomics focuses on the study of the entire economy at the national and international level.

What is the primary focus of microeconomics as described in the script?

Microeconomics looks at individual and firm level decision making and dynamics.

What key concepts do economists use to understand trade-offs and decision making?

Economists use key concepts like opportunity cost to understand trade-offs and decision making.

What does the term 'thinking at the margin' refer to in the context of economics?

In economics, 'thinking at the margin' refers to considering the incremental costs and benefits of a decision rather than absolute changes.

How do economists study economic issues as per the script?

Economists study economic issues using math, statistics, data, reasoning, and a variety of tools to provide useful information to decision-makers.

What is the circular flow model described in the script?

The circular flow model is a picture that shows households providing labor to businesses in exchange for incomes and wages, and businesses providing goods and services that households pay for with money.

What is the role of incentives in the economy as discussed in the script?

In the economy, incentives play a crucial role as they motivate workers to do good work for higher pay and businesses to provide quality products at low costs to earn profits.

What does the script suggest about the objectivity of economics?

The script suggests that economics is supposed to be objective, with economists acting as analysts rather than advocates, aiming for a 'cold-hearted search for the truth'.

How does the script describe the nature of economics as a science?

The script describes economics as an inexact science because, unlike some physical sciences, it doesn't have controlled experiments and has to deal with messy real-world data.

What are some of the fields within economics mentioned in the script?

Some fields within economics mentioned in the script include environmental and ecological economics, health, education, industrial organization, regional, labor, and demographics.