It’s been heavily debated whether or not economics can actually be considered a science. Although this argument has been around for a long time, tensions appeared to reach their peak in 2013 when three economists were awarded the Nobel Prize in Economics.
Although that news does not sound particularly polarising, the issue many had with the award was the fact that two of the economists in receipt of that award seemed to have views that directly contradicted each other:
- Robert Shiller; and
- Eugene Fama
Given that the aim of a science such as physics or chemistry is often considered to be the search for a single principle or truth, it appeared that such rules did not apply to the realm of economics and that one economist could freely disagree with another.
In the five years since that particular Nobel Prize, has this debate been settled? Sadly, the short answer is no. Although arguments are rife on both sides, the jury appears to be out as to whether economics should be classed as a science, a social science, or whether it is no science at all.
We look below at the fundamental issues that determine why economics is so difficult to consider as a science. What’s more, we also outline why these arguments should not fundamentally change how we look at economics as a subject, as it still remains a crucial field that can help us to better understand why it is that we act the way we do.
Is Economics A Science?
Natural science is defined in the Merriam-Webster dictionary as:
“any of the sciences (such as physics, chemistry, or biology) that deal with matter, energy, and their interrelations and transformations or with objectively measurable phenomena.”
When it comes to the social sciences, such as law or politics, the Merriam-Webster dictionary defines social science as:
“a branch of science that deals with the institutions and functioning of human society and with the interpersonal relationships of individuals as members of society”
Clearly, the dictionary definitions seem to support the assumption that economics would be much more at home within the realm of the social sciences than the natural sciences, despite the fact that the full title for the Nobel Prize in Economics is, in fact, the Nobel Memorial Prize in Economic Sciences.
There are a few reasons why people seem to feel more at ease calling economics a social science.
Find out about economic meaning.
Objectivity and Politics
The struggle that economists face is that it can be difficult to be objective when examining data. In stark contrast to the “hard” sciences, in an economic model, there is often no control test on which you base your economic analysis.
Further, the results produced by an economic model or economic experiment can be subject to individual interpretation, depending on:
- what aspect of the results the economist focuses their attention on;
- the methodology an economist uses to reach a conclusion; and
- how an economist applies economic analysis when they examine their data.
Closely tied in with objectivity is the fact that many economists’ ideas, models, and approaches can be heavily shaped by their political beliefs, or by the political administration of the time and their approach to the economy and current economic problems.
Given this inherent bias, perhaps even uncertainty, within economic models and systems, some argue that economics cannot, and will not ever be, a science in the truest sense.
Limitations of experiments
Another argument levied against economics being classed as a natural science is the fact that, although physicists, biologists, and the like can set up controlled experiments to test a hypothesis, which produces concrete results from which a conclusion can be drawn, the same cannot be said of economics experiments.
At its core, economics is the study of human behaviour, and how that impacts the economy. Human behaviour is not as concrete as the behaviour or properties of, say, an atom, and the fact is that human behaviour can be unpredictable, as individuals can change their minds in a dynamic way at a moment’s notice.
Due to this, economic experiments are difficult, if not impossible, to carry out in a controlled environment, and almost certainly cannot produce a conclusion that applies a rule across human behaviour and decision-making. As such, economic studies produce a “best guess” result that may give an indication of how individuals, or an economy, will perform under a certain set of circumstances.
However, that’s not to say that economics experiments are not without their worth, or that any numerical element to an economic theory is simply for show. There are many economists today whose research on economic issues uses a combination of mathematics and statistics to help understand the inner workings of economics.
This field is known as econometrics, and it can often feature as part of an economics degree at university, or in an economics position post-graduation.
Is Economics A Social Science?
As noted above, many people would be more likely to argue that economics, if it is a science at all, fits more within the social sciences sector than amongst the sciences of chemistry and its companions.
However, is it fair to apply this general conclusion across all areas of economics? There is more than one school of economics, and economics as a subject is made up of many individual niches, including:
- International economics;
- Environmental economics; and
- Financial economics.
What’s more, economics as a field can almost be divided into two areas. On one side you have the field of macroeconomics, which looks at economies as a whole. On the other hand, there’s microeconomics, which seeks to study human behaviour at the level of the individual and its impact on the wider economy.
Interestingly, many of the theoretical arguments levied against economics being a science tend to focus on the realm of macroeconomics, rather than microeconomics.
This is because macroeconomics is, by its very nature, much more difficult to gain a deep level of insight on. This is because there are difficulties observing, testing and commenting on developments in the aggregate and their implications.
Indeed, many macroeconomic theories, from Keynesianism to monetarism, offer contradicting theories on what an economy needs for stability or wealth creation, as an undergraduate student at a university will often hear in a lecture.
On the other hand, microeconomics is much easier to test in a way that produces repeatable and observable economic trends and results.
Understanding Economic Science
Although there have been arguments going back and forth for years as to whether economics can truly be considered a science or not, the answer is, does it truly matter?
The importance of studying economics is in no way diminished by its classification as a science, social science, or indeed, no science at all.
At its core, economics studies how individuals behave and interact with one another, and how our behavioural quirks can inform how we decide to share our resources.
Being able to understand the human condition and how rational we truly are is a core part of economics, and it may well be that, due to the very unpredictable nature of humans, economics will never be able to call itself a natural science.
That does not mean, however, that economic models, theories and studies, mathematical, statistical, or otherwise, are not useful.
Although such studies are unlikely to produce results that can act as a crystal ball, or that can predict a financial crisis such as that in 2008, economics can let us know:
- how well our local or global economy is performing;
- whether economies do benefit from levying higher taxes, or by implementing increased regulation;
- whether an economy is set to face a period of inflation or deflation; and
- how we could increase economic growth, or at least try to maintain it.
In that sense, as an academic discipline economics remains crucial, and it is a widely-respected field of study.
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