Since common currently accepted definitions of economics stems from

Since the conception
of economic thought there have been various definitions of subject matter
concerning economics. These differences in definitions are due to the problems
of the time period of said definition and the then current economic problems
(Maas, 2014). One of the first mentioning of economics was made in ancient
Greece around the 4th century BC by Aristoteles who defined ”Oikonomos”
as the art of housekeeping (Nagle, 2006). ”Oikonomos” was millennia later
translate in English to the current word economy. The addition of the word
”political” to economy represents the idea that economic thought might be
used to the extended level of nations and societies (Backhouse & Medema, 2009).
In Adam Smith’s ”An Inquiry into the
Nature and Causes of the Wealth of Nations” (1776) it was stated that
Political Economy was the science of wealth. It argued how and why there are
relative differences in wealth between nations and how the sovereign can enrich
itself and its people.

This broad
wealth-based definition was in the early 19th century sharpened by
various economist, like Jean-Baptiste Say (1803), who stated that political
economy is ”the science that treats the production, distribution and
consumption of wealth”, and George Whatley (1832), who stated that ”economics
is the study of exchanges” (Backhouse & Medema, 2009).

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

In the late 19th
century there was a shift from wealth based definitions of economics to one
more related to human behaviour, this is best visible in the works of Alfred
Marshall and William Jevons. Marshall (1890) defined the subject matter of
economics as ”The study of mankind in the ordinary business of life; it
examines that part of individual and social action which is most closely
connected with the attainment and with the use of the material requisites of
wellbeing, making it on one side a study of wealth and on the other, a part of
the study of man”. Whereas Jevons (1871) defined economy as ”a calculus of
pleasure and pain”, putting the focus more on utility then on the accumulation
of wealth (Backhouse & Medema, 2009).

One of the most common
currently accepted definitions of economics stems from Lionel Robbins. In his ”Essay on the Nature and Significance of
Economic Science” (1932) Robbins defined economics as ”the science which
studies human behaviour as a relationship between ends and scarce means which
have alternative uses” (Backhouse & Medema, 2009). Robbins utilized the
idea of human behaviour just as Marshall and Jevons did, but placed the
emphasise on the scarcity of goods as a constraint for utility in his
definition of economics.

Robbins’s scarcity
assumption implies that individuals must make a choice, and this process can be
determined by rational maximization, or via bounded rationality of said
individual. Nevertheless, even if scarcity makes choices necessary, it isn’t required
for economists to focus on the process of individual choice, even if it is
rational or not. The reasoning behind this is the fact that scarcity leads to
increasing prices, and from that economists can analyse markets and mechanisms
even with or without rational-choice assumptions. This resulted in an open
space in the scarcity definition of economics where other economist like Milton
Friedman, George Stigler and Paul Samuelson could have different views on the
subject matter of economics (Backhouse & Medema, 2009).

Friedman (1962) stated
that economics was ”the science where societies solve their economic
problems” and where ”problems exist when scarce means are used to satisfy
alternative ends”, leaving out any mentioning of rationality. (Backhouse &
Medema, 2009).

Whereas George Stigler
(1942) defined economics as ”the study of the principles governing the
allocation of scarce resources among competing ends when the objective of the
allocation is to maximize the attainment of the ends” linking the idea of
scarcity to profit maximization (Backhouse & Medema, 2009).

Samuelson didn’t clearly
define economics in his ”Foundation of
Economic Analysis” (1947), but he did use Stigler’s notion of maximization
under constraints. These definitions placed the focus of economics on maximization
and rationality where we look at the choices people make to attain their
optimal utility.

Another interesting
development in subject matter of economics is the outward movement of the
boundaries of economics during the 1960’s. One economist, Gary Becker (1971),
was known for pushing these boundaries from their traditional market-based
boundaries to other subjects like crime, discrimination, marriage, etc. Even
though Becker’s definition of economics came close to Robbins’s definition,
namely ”the study of the allocation of scarce means to satisfy competing
ends”, it was the fact that he utilized this definition on non-market
behaviour that made him stand out from Robbins’s work (Backhouse & Medema,
2009).

 Most modern economists do not ascribe
themselves to a definition of the subject matter of economics. The reasoning
behind this is the fact that most definitions of economics tend to be
inadequate due to the great current variation in the work field of economics.
This doesn’t have to be a problem according to Backhouse and Medema since economists
are generally guided by pragmatic considerations and other differing methodologic
views (Backhouse & Medema, 2009).

To form a definition on
the subject matter of economics, we must sum up the current definitions given
and see to what extent of the definition we agree to. Personally, I agree to
some extend with the wealth-based definitions of economics, that it increases
the means of said individual. However, this wealth may as well come in the forms
of utility, like happiness and pride. The results in wealth don’t have to be
tangible, but they do assume that the individual wants to gain from the
interaction.

Also, I do accept the
notion of Robbins that scarcity is an economic factor that constrains individuals
in their behaviour. There is never an infinite amount of means we can obtain or
spend. This results in choices individuals must make and with these constraints
comes opportunity costs. Since the individual can’t choose everything it has to
miss out on something else which results in said opportunity costs.

Furthermore, Becker’s
suggestion of utilizing the definition of economics outside the traditional
market-based boundary is also useful in defining the subject matter of economics.
This broadens the field of economics to other subjects.

With all these definitions
summed up, I can from my definition of the subject matter of economics as
follows:

”Economics is the science where humans try to make the best choice available
in a situation under constraints, with the goal of obtaining the best result as
possible and with the least amount of opportunity costs suffered”

This is in my opinion
the best way to define economics. This definition comes close to Stigler’s and
Samuelson’s definitions of economics to a certain degree since they argued that
scarce means to competing ends also assume a form of profit maximization.

Furthermore, Friedman’s
influence on the definition is visible in the addition of ”humans try to make
the best choice available” which tackles the problem of rationality vs. bounded
rationality. The idea behind this is that it implies that people always have the
rational goal of reducing opportunity costs to the lowest amount, but that it
doesn’t mean that the people must succeed in achieving the most optimal
outcome.

 And the last influence in the form of ”the
best choice available in a situation” comes from Becker, stating that economic
behaviour can also exist outside the market boundaries.