The economics definition is a complex subject that has been the target of numerous polemics. Nevertheless, most economists agree on the necessity of having a clear and concise definition.
The study of economics can be broadly defined as the study of the relationship between ends and scarce means. It is a science that analyzes the effects of resource allocation on prices, production, and consumption. Economic resources include both natural resources and human resources. Increasing the use of these resources leads to a higher standard of living.
In the classical economics, economics was characterized as the study of exchange and consumption. Later, the term was expanded to include the study of wealth. These definitions were criticized for being too broad. Frank Knight, for instance, believed that both Marshall’s and Robbins’ definitions were too general.
Robbins’ definition placed a particular emphasis on the study of well-being. It also emphasized the importance of allocative decisions. However, it did not sufficiently distinguish economics from other social sciences.
Similarly, the Smithian definition of economics overemphasized material aspects of well-being. It also forced the subject to ignore non-material aspects of life.
Another definition of economics has been proposed by Lionel Robbins. His essay, Essay on the Nature and Significance of Economic Science, was published in 1932. He argued that the subject of economics is not just a study of exchange, but is a positive science that deals with problems arising from scarcity.
Today, economists have become quite diverse, tackling topics like economic history, behavioral economics, and the explanatory role of behavioral norms. They have also debated the explanatory role of rationality.
