A social science
Definition
Economics: a social science that studies how people, firms and governments allocate scarce resources among competing uses.
Social science: a discipline that uses the scientific method to study human behaviour rather than the physical world.
Economic model: a simplified representation of reality that strips away detail to reveal one key relationship clearly.
- It is classed as a social science because its subject matter is human behaviour rather than the physical or natural world.
- Like the natural sciences, it uses the scientific method to build theories and test them against real-world evidence.
- Unlike them, it studies people, whose choices are shaped by expectations, habits and emotions and so are harder to predict.
- As a result, economic conclusions are reliable tendencies rather than exact, unchanging laws.
Key Idea
- Economics applies the scientific method to human choices made under scarcity.
- Because people are less predictable than matter, its predictions hold on average rather than in every case.
The scientific method
- Economists begin by observing behaviour, such as fuel sales falling whenever the pump price rises.
- They form a testable hypothesis, for example that a higher price reduces quantity demanded, ceteris paribus.
- They gather data to test it, and if the evidence repeatedly fits, the idea becomes an accepted theory or model.
Example
- An economist wants to know whether raising a product's price reduces the quantity people buy.
- Step 1: observe that a shop's sales fell after it raised prices.
- Step 2: form the hypothesis that a higher price reduces quantity demanded, ceteris paribus.
- Step 3: gather price and sales data from many shops and test whether the pattern holds.
- Step 4: if it holds, treat it as a reliable tendency; if not, revise the hypothesis.
Models and assumptions
- Because a whole economy cannot be placed in a laboratory, economists build simplified models of reality.
- A model deliberately strips away detail to reveal one key relationship clearly.
- The assumption of ceteris paribus, meaning other things equal, is the most common simplification.
- Good assumptions make a model useful without making it so unrealistic that its predictions fail.
Note
- The natural sciences can usually isolate one variable in a controlled laboratory experiment.
- Economists rarely can, so they rely on simplifying assumptions to isolate a cause instead.
How exact is it?
- Because behaviour changes, the same event can produce different results at different times.
- This does not make economics unscientific; it means its findings are probabilistic tendencies rather than certainties.
- Testing models against fresh data still lets economists refine predictions and inform policy.
Exam technique
- State clearly that economics is a social science using the scientific method.
- Explain that it builds and tests models of human behaviour.
- Add that unpredictable behaviour limits precision, which is why assumptions like ceteris paribus are needed.
Common Mistake
- Do not treat economics as an exact science like physics, because it studies unpredictable human behaviour.
- Do not forget that models rely on simplifying assumptions, so their predictions are tendencies, not guarantees.
Self review
- Why is economics classed as a social science?
- What are the main steps of the scientific method in economics?
- Why is it hard to run controlled experiments in economics?
- Why are economic predictions tendencies rather than certainties?
