THINKING LIKE AN ECONOMIST:

1. Economics: Is It a Science?

While economics is a science, it is not a natural science. It is a social science. Its subject is
human beings: people and how they behave.

 First, because economics is a social science, debates within economics last a lot longer
and are much less likely to end in a clear consensus than are debates in the natural
sciences.
 Second, the fact that economics is about people means that economists cannot
ethically undertake large-scale experiments.
 Third, the subjects economists study people have minds of their own.

2. The economics is a abstract science that emphasizes general principles applicable to a

variety of situations. Today’s economics courses focus more on analytic tools and
chains of reasoning and less on institutional descriptions.

3. Economics is a relatively mathematical subject because so much of what it analyzes

can be measured. Thus economists use arithmetic to count things and use algebra
because it is the best way to analyze and understand arithmetic.

4. When macroeconomists build models, they usually follow four key strategies:

 Strip down a complicated process to a few economy wide behavioral relationships and
equilibrium conditions.
 Simplify ignore differences between people in the economy.
 Look at opportunity costs as ways to understand behavioral relationships.
 Focus on expectations of the future, and how such expectations affect the present.