Who is economics

Humorous essay. Zero-sum games like income redistribution are more exciting than economic fundamentals like the gains from trade. Why is Economics So Boring? Econlib, November 7, Stan: Ollie, you know the worst part about being an economist? You meet someone at a cocktail party, you tell them you teach economics. I hated it.

It was sooo boring! And we care about zero sum games. What common in reality is both sides are better off. The buyer and the seller of the car in the ad. No violence, no theft. Boring balloons. Boring happy people. Economics is boring…. Is economics just a fuss about language? It can even—for better or worse—change our perceptions of things…. Economics is sometimes called catallarchy or catallactics, meaning the science of exchanges.

Where did this term first come from? It is with a view to put you on your guard against prejudices thus created, and you will meet probably with many instances of persons influenced by them, that I have stated my objections to the name of Political-Economy.

It is now, I conceive, too late to think of changing it. Is Economics All About Scarcity? Blog discussion on EconLog, January 17, On the one hand, just because food, say, has become more abundant does not mean that we can ignore scarcity. At any moment in time, for a given state of know-how, the conventional definition of economics as dealing with the allocation of scarce resources among competing ends applies.

On the other hand, some of the most interesting economic observations concern relative abundance. Look at our standard of living compared to years ago.

Studying economics teaches you to think in a different of way. Think back to pioneer days, when individuals knew how to do so much more than we do today, from building their homes, to growing their crops, to hunting for food, to repairing their equipment.

Most of us do not know how to do all—or any—of those things. It is not because we could not learn. Rather, we do not have to. The reason why is something called the division and specialization of labor , a production innovation first put forth by Adam Smith , Figure 2 , in his book, The Wealth of Nations.

The formal study of economics began when Adam Smith — published his famous book The Wealth of Nations in Many authors had written on economics in the centuries before Smith, but he was the first to address the subject in a comprehensive way. In the first chapter, Smith introduces the division of labor , which means that the way a good or service is produced is divided into a number of tasks that are performed by different workers, instead of all the tasks being done by the same person.

To illustrate the division of labor, Smith counted how many tasks went into making a pin: drawing out a piece of wire, cutting it to the right length, straightening it, putting a head on one end and a point on the other, and packaging pins for sale, to name just a few.

Smith counted 18 distinct tasks that were often done by different people—all for a pin, believe it or not! Modern businesses divide tasks as well. Even a relatively simple business like a restaurant divides up the task of serving meals into a range of jobs like top chef, sous chefs, less-skilled kitchen help, servers to wait on the tables, a greeter at the door, janitors to clean up, and a business manager to handle paychecks and bills—not to mention the economic connections a restaurant has with suppliers of food, furniture, kitchen equipment, and the building where it is located.

A complex business like a large manufacturing factory, such as the shoe factory shown in Figure 3 , or a hospital can have hundreds of job classifications.

When the tasks involved with producing a good or service are divided and subdivided, workers and businesses can produce a greater quantity of output. In his observations of pin factories, Smith observed that one worker alone might make 20 pins in a day, but that a small business of 10 workers some of whom would need to do two or three of the 18 tasks involved with pin-making , could make 48, pins in a day.

How can a group of workers, each specializing in certain tasks, produce so much more than the same number of workers who try to produce the entire good or service by themselves? Smith offered three reasons. First, specialization in a particular small job allows workers to focus on the parts of the production process where they have an advantage. In later chapters, we will develop this idea by discussing comparative advantage.

People have different skills, talents, and interests, so they will be better at some jobs than at others. The particular advantages may be based on educational choices, which are in turn shaped by interests and talents.

Only those with medical degrees qualify to become doctors, for instance. For some goods, specialization will be affected by geography—it is easier to be a wheat farmer in North Dakota than in Florida, but easier to run a tourist hotel in Florida than in North Dakota.

If you live in or near a big city, it is easier to attract enough customers to operate a successful dry cleaning business or movie theater than if you live in a sparsely populated rural area. Whatever the reason, if people specialize in the production of what they do best, they will be more productive than if they produce a combination of things, some of which they are good at and some of which they are not.

Second, workers who specialize in certain tasks often learn to produce more quickly and with higher quality. This pattern holds true for many workers, including assembly line laborers who build cars, stylists who cut hair, and doctors who perform heart surgery. In fact, specialized workers often know their jobs well enough to suggest innovative ways to do their work faster and better. A similar pattern often operates within businesses.

Third, specialization allows businesses to take advantage of economies of scale , which means that for many goods, as the level of production increases, the average cost of producing each individual unit declines. For example, if a factory produces only cars per year, each car will be quite expensive to make on average. However, if a factory produces 50, cars each year, then it can set up an assembly line with huge machines and workers performing specialized tasks, and the average cost of production per car will be lower.

The ultimate result of workers who can focus on their preferences and talents, learn to do their specialized jobs better, and work in larger organizations is that society as a whole can produce and consume far more than if each person tried to produce all of their own goods and services. The division and specialization of labor has been a force against the problem of scarcity. Specialization only makes sense, though, if workers can use the pay they receive for doing their jobs to purchase the other goods and services that they need.

In short, specialization requires trade. You do not have to know anything about electronics or sound systems to play music—you just buy an iPod or MP3 player, download the music and listen. You do not have to know anything about artificial fibers or the construction of sewing machines if you need a jacket—you just buy the jacket and wear it.

You do not need to know anything about internal combustion engines to operate a car—you just get in and drive. Instead of trying to acquire all the knowledge and skills involved in producing all of the goods and services that you wish to consume, the market allows you to learn a specialized set of skills and then use the pay you receive to buy the goods and services you need or want.

The word 'economics' comes from two Greek words, ' eco ' meaning home and ' nomos ' meaning accounts. The subject has developed from being about how to keep the family accounts into the wide-ranging subject of today. Economics has grown in scope, very slowly up to the 19th century, but at an accelerating rate ever since. Today it has many of the features of a language. It has linguistic roots, grammatical rules, good and bad constructions, dialects and a wide vocabulary which grows and changes over time.

You may already have studied economics and there is the danger that the language that you learnt has changed, so be careful! Also, there are different ways of learning economics. Every short statement about economics is misleading with the possible exception of my present one. Nevertheless, definitions are a useful place to begin. A standard definition of economics could describe it as:. By extension of our basic definition, economics as applied to agricultural and environmental issues is concerned with the efficient allocation of natural resources to maximise the welfare of society.