ECONOMICS AS A SCIENCE

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ECONOMICS AS A SCIENCE:

Science is defined as a body of knowledge about our physical world acquired through systematic enquiry and considerable mental efforts. Economics is regarded as a science because it adopts scientific methods or procedures in explaining its phenomena.

For example, just like the pure sciences, economics involves collection of data. After collection and classifying the data, the economist tries to discover Certain uniformity governing a particular class of phenomena. From this uniformity, generalization is made which is called law. The validity of the law or theory formulated can best be tested by applying it to real situation.

Besides, economics has its own laws. For example, the first law of demand states that “ all other things being equal” the higher the price of a commodity the smaller the quantity that is demanded and the lower the price the greater the quantity.

Economics is considered as a science because it uses scientific method in its analysis. The various steps in the scientific method employed by the economist are as follows;

i. Statement of the Problem:-

The economist just like the physical scientist approaches the study of human behaviour as related to production, distribution and consumption by stating or identifying a problem. For instance, the economist observes how human beings behave towards changes in prices of commodities that they buy.

ii. Hypothesizing on the problem:-

The economist then formulates hypothesis or forms an assumed explanation of the problem using what he was able to gather through his observation. For example, when the price of a commodity falls, say rice, more of it will be bought and when the price increases less of it will be purchased , all other things being equal.

iii. Collection of Data on the Problem:- The Economist like the physical scientist goes to the field to collect data on the problem with

the aid of questionnaires and conduct interviews. For example, the economist goes to the market and with the aid of questionnaires he is able to get information from both sellers and buyers about the changes in prices of the commodity he (i.e. the economist) is conducting his research

on.

iv. Organization / Processing of the Data:- The economist proceeds to analyse the data by removing irrelevant materials or information and

classifies them into different categories. The economist processes the data with the view to establishing a relationship between the issues at stake i.e. why consumers buy more rice when

its price reduces and less when its price increases.

v. Theorising or Generalization on the basis of the Data:-

To ascertain the validity of his (the economist) findings, he generalizes his findings by saying that “all things being equal" more of a commodity will be demanded when the price falls and less of it will be demanded when the price rises.

vi. Testing of the theory with the new Data:-

The Economist goes back to the field to collect new data on the problem and have them re- tested. If the theory is confirmed then he can make a generalize statement that if the price of rice falls consumers will buy more, assuming that prices of other related goods remain the same.

vii. Predicting on the basis of the theory formulated:—

On the basis of the theory, the Economist like the physical scientist proceeds to predict into the future by saying that a firm should expect to sell less if it should increase the price of its goods and services if prices of other goods do not change.

Limitation of Economics as a Science:-

Economics as a social science has certain problems or limitations. One is that, controlled or laboratory experiments cannot be under taken. A controlled or laboratory experiments are experiments in which a single factor affecting the result can be excluded in each experiment. Unfortunately, human beings who are the subject matter of economics cannot be subjected to controlled or laboratory experimentation. This makes it difficult for economics to link cause and effect. However, to overcome this problem, economists make certain assumptions that human beings always act rationally. Thus most economics statements are preceded by the phrase, ceteris paribus,’ that is “all other things being equal”. For instance, quantity demanded will increase when price fails, when other factors such as future changes in price are held constant. It means that economists do not make sweeping generalisation or statements which may not be

accepted universally.

Another problem is that. it is more difficult to make predictions about human behaviour than in the animal sciences. The reason is that individuals react or behave differently to identical conditions at different times and places. For instance, when the price of a good falls, quantity demanded by some consumers will rise whilst that of others decline. However, it is still possible to determine group behaviour though individual behaviour cannot be easily determined. Thus because the reaction of groups of individuals to certain conditions or events is more stable, extreme behaviours by groups cancel each other out 

Conclusions or theories are not as rigid as in the natural Sciences. Economics is then seen as a “soft” or “inexact” sciences as against the “hard” physical sciences. 

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