Is Economics a Science? Have students discover what a science is and how they can clasify subjects according to this.

1. Is Economics a Science?

2. Human Sciences
• Can you ever study humanity using
scientific methodology?
• 2 main areas of criticism
– Assumptions
– Data

3. The Demand Curve
• As the price falls,
the quantity
demanded
increases
• Common sense?
Quantity
Price
D

4. The Demand Curve
• Is this always true?
– Why do more people demand a Nike T-
shirt at a higher price than demand an
identical unbranded T-shirt at a lower
price?
• Economic theory is based on
assumptions

5. Perfect competition
• The demand curve shown assumed the
following:
– There must be many buyers and sellers
– There is freedom of entry to and exit from the
market
– Buyers and sellers have perfect knowledge of
prices
– All firms produce a homogenous product
• Are the above true for the T-shirt market?

6. Assumptions
• You can’t put economics (or
psychology, sociology etc) in a test
tube and control variables
• Therefore you need to make
assumptions to try and discover
trends and theories about the world
we live in

7. Economic data
• Is it real, empirical evidence?
• Look at unemployment
– “actively seeking work at current wage
rates”
– Government counts those that claim
benefits (claimant count)
• Your turn
– Why will unemployment data
calculated in this way be inaccurate?

8. Inaccuracy of data
• Why will it be inaccurate?
– Some people working and claiming
– Government changes the rules, e.g.
disability benefit
– Takes time before you are allowed to
claim benefits
– Working spouses
• Other methods (surveys) also likely
to be inaccurate

9. Economic Data
• These different measures are not “fact” in
a scientific sense

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12. Survey data
• Surveys can be inherently unreliable
• Why?
– People don’t always tell the truth
– Sample sizes too small
– Surveys can be biased

13. Causation and correlation
• Can you isolate variables enough to
draw conclusions?
• The delivery of milk correlates
strongly with the rising of the sun
• Does this mean that the sun causes
the milk to be delivered?

14. Causation example
• Do higher interest rates lead to less
demand?
– Yes
• Higher mortgage payments
• More attractive saving
• Less investment
• All resulting in lower spending
– BUT
• Loads of other things also lead to less demand, e.g.
– Higher unemployment, slower economic growth,
lower consumer confidence,
– Therefore, in Economics you can’t easily say
that in a particular instance that X caused Y

15. Conclusions
• Can humans be subjected to a scientific
approach?
– Although humans are individuals, that does
not mean that you cannot make
generalisations
– Data, although unreliable, can still be very
useful if you are aware of its limitations
– Assumptions are necessary to increase our
understanding – this is not the same as trying
to concretely prove or disprove certain
theories

16. What’s the point
• Natural sciences just look at how
things work
• Social sciences look at how things
should work

17. Task
• Quentin is a geek who has no time for
anything that cannot be proved by numbers
• As keen social science students you want to
convince him otherwise
• In groups of 5 prepare your arguments to him
covering the following broad points:
– Why your chosen social science is useful as
an academic subject
– What limitations there are in studying
humanity
– What limitations there are in studying pure
sciences