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Meaning of Economics

Etymology, four major definitions (Smith, Marshall, Robbins, Samuelson).

Notes

Meaning of Economics

Class 11 Statistics — Etymology, Four Major Definitions, and Why We Study Economics

Etymology and Introduction

Economics (Etymology)
Derived from two Greek words — 'Oikos' (a house) and 'nemen' (to manage). Literally means 'Household Management'. Earlier called 'Political Economy'.

No Universal Definition

There is no single accepted definition of economics. Different economists have defined it in different ways, leading to disputes and misconceptions. The definitions are broadly classified into four schools: Wealth (Smith), Welfare (Marshall), Scarcity (Robbins), and Growth-oriented (Samuelson).

The Four Definitions of Economics

Each school of thought built on and responded to the previous one. Click each card to explore the definition, features, and criticism.

Why Do We Study Economics?

The Single Reason: Scarcity

The main reason for studying economics can be simplified to one word: 'Scarcity'. Human wants are greater than available resources, so there is a need to allocate scarce resources to satisfy never-ending wants. Economics is concerned with the selection of resources under conditions of scarcity.

Key Takeaways

  • Economics helps us understand different aspects of the economy
  • It helps in analysing problems and policies of the government
  • The core problem is scarcity: unlimited wants vs limited resources
  • Economics studies how to allocate scarce resources for maximum satisfaction

Conclusion — Consolidated Definition

Economics (Consolidated Definition)
Economics is the study of how people and society choose to employ scarce resources that could have alternative uses in order to produce various commodities that satisfy their wants and to distribute them for consumption among various persons and groups in society.