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Economic Theory

Economics

Definition:

The first person who introduced "Economics" as a subject was Adam Smith (1723-1790).Adam Smith wrote a book in 1776 whose title was "Wealth of Nations". In his book he discussed the word 'wealth' through its four aspects:
• production of wealth,
• exchange of wealth,
• distribution of wealth and
• consumption of wealth.

Therefore it can be said according to Adam Smith:
"Economics is a science of wealth"

It was criticized on Adam Smith’s definition by British economist Alfred Marshall (1842-1924). He was one of the founders of the "neoclassical" school in which economists studied both wealth and human behavior to understand why we make the choices we do. Marshall, in his famous book Principle of Economics published in 1890, defines economics as follows:

"Political Economy or Economics is a study of mankind in the ordinary business of life.
The following are the implications of this definition:
• Economics is a study of mankind;
• Human life has several aspects -- social, religious, economic and political -- but economics is concerned only with the economic aspect of life;
• Promotion of welfare is the ultimate goal, but the term welfare is used in a narrow sense to meet material welfare only.

English economist Lionel Robbins criticized Marshal's definition of economics in his book "Nature and Significance of Economic Science". That was written in 1932. According to him:

“Economics is the science which studies human behavior as a relationship between scarce means which have alternative uses”.

Finally we can say that “Economics is the choosing the best choice in every field of life”.

Significance

Economics is a behavioral science, and in large part , the study of how people make choices. There are four main reasons to study economics
• To learn a way of thinking,
• To understand society,
• To understand global affairs, and
• To be an informed citizen,
Probably...