Q3. “Economics is the study of mankind in the ordinary business of life.”-Discuss the statement (Dec’12).
Or. “Economics is a science of wealth.”-Discuss (May’12).
Alfred Marshall provides a still widely-cited definition in his textbook Principles of Economics (1890) that extends analysis beyond wealth and from the societal to the macroeconomic level:
"Economics is a study of man's action in the ordinary business of life it inquires how he gets his income and how he uses it. It examines that part of individual and social actions which is mostly closely connected with the attainment and with the use of material requisites of well being. Thus economics is on one side a study of wealth and on the other and important side a part of the study of man ".
From the definition of economics by Alfred Marshall, we see that he lays emphasizes on the below points.
1. Study of an ordinary man: According to Alfred Marshall, economics is that study of an ordinary man who lives in society. It is not concerned with the lives of only rich persons or who is cut away from the society. Its subject matter is a particular aspect of human behaviour i.e. earning and spending of incomes for the normal material needs of human beings.
2. Economics is not a useless study of wealth: Economics does not regard wealth as the be-all and end-all of economics activities wealth is not of primary importance. It is earned only for promoting human welfare economics is studied to analyze the causes of material prosperity of individuals and nations.
3. Economics is a social science: It does not study the behaviour of isolated individuals but the actions of persons living in society. When people live together they interact and cooperate to work at firms, factories, shop and offices to produce and exchange goods or services. The problems about these activities are studied in economics.
4. Study of material welfare: According to Alfred Marshall, economics studies only material requisites of well being or causes of material welfare. It is cleared from this definition that it is materialistic aspect and ignores non-material aspects. Alfred Marshall stressed that the man’s behaviour and activities to produce and consume maximum number of goods and services are the main object of study wealth is not an end or final aim, but only a means to achieve a higher objective of welfare.
Q2. Discuss the subject-matter of Economics (Nov’11).
The subject matter of Economics is the economic behaviour of man which is highly unpredictable. Money which is used to measure outcomes in Economics is itself a dependent variable. It is not possible to make correct predictions about the behaviour of economic variables.
Various economists have different views about the subject matter of economics. Adam smith, in his book “An Inquiry into the nature and causes of Wealth of Nations which was published in 1776 defined economics as an enquiry into the nature and causes of wealth of Nations in other words it lays importance on wealth rather than welfare of human beings. It shows to a man uses wealth produces wealth and how wealth is exchanged and distributed in the economy.
According to the 19th century economists Alfred Marshall, “Economics is the study of mankind in the ordinary business of life. It enquires how he gets his income and how he uses it. It examines that part of individual and social action, which is most closely connected with the attainment and with the use of material requisites of well-being.
It is on the one side a study of wealth and on the other and more important side is a part of the study of man”. Professor Marshall has shifted the emphasis from wealth to man. Alfred Marshall gives priority to human beings and placed wealth at secondary level.
If we talk about Robbins concept of subject matter of economics, according to Robins, it studies behavior of a man and relates it between ends and scarce resources which have alternative uses. According to Robbins wants are unlimited in number while means are scarce, not only limited but alternative uses. The main problems arises that how to utilize the scarce resource to fulfill the unlimited wants is a subject matter of economics.
According to modern economist like Peterson and Samuelson the subject matter of economics is a science that studies only those activities of human being which he undertakes to maximize his satisfaction by making proper use of scarce resources.
All these economists have combined in their definition the essential elements of the definitions by Marshall and Robbins. According to modern economists the efficient allocation and use of scarce means results in increase in economic growth and social welfare is promoted.
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