Economics, A Social Science?

Economics looks at how people and societies make choices to use their limited resources to meet unlimited wants. It’s called a social science because it studies human behaviour and decision-making. Unlike subjects such as chemistry or physics, economists can’t test ideas in a lab. Instead, they use data, models, and theories to understand and predict how people and markets behave.

What are economic models?

Economists create economic models to explain how the economy works. These models are simplified versions of reality and include assumptions about who is involved, what their goals are, and how they interact.

You’ll come across many models in A-Level Economics, like supply and demand.

One key idea in these models is ceteris paribus, which means “other things being equal.” This helps economists focus on one factor at a time.

For example, if the price of ice cream goes up, people will usually buy less of it, ceteris paribus. That means we assume everything else, like income or the weather, stays the same. A slightly more detailed example is that if the price of petrol rises, the quantity demanded will fall, assuming other factors such as car ownership or income don’t change.

Can we conduct experiments in economics?

It’s hard to do proper experiments in economics. In real life, ceteris paribus rarely holds because many factors change at once. In science, you can test one thing at a time under controlled conditions. In economics, that’s much harder. For example, if the government increases spending, it’s difficult to know exactly how that affects unemployment, since other things—like interest rates or global events—may also be changing.