In this article we have explained economics as a social science.
The answers to this question is ‘Yes and No’. Economics can never be an exact science, and is a different kind of discipline to, say, physics or chemistry.
The essence of science is prediction. Physical ‘laws’ tell us what we believe must happen.
If you drop a pencil out of an upstairs window the known laws of physics predict that it must fall to the ground.
If ever a pencil flew vertically upwards, then physicists would have to look again at those laws in order to accommodate this new possibility and here is where the. ‘Laws’ of economics are very different from the ‘laws’ of physics. Economics is a social science, which means that it studies aspects of human behaviour. Fig. 2 shows how different social sciences overlap.
To the extent that the economist makes use of scientific method, economics may be described as a science. The subject matter of economics, however, is human behaviour and this is much more difficult to predict than the reactions of inanimate matter. Economists, like other social scientists, cannot achieve the precision of the natural scientists.
The most obvious limitation experienced by the social scientist, is that, he cannot test his hypotheses by laboratory experiment. His laboratory is human society; he cannot put a group of human beings into a controlled situation and then see what happens. The predictions of economic theory must be tested against developments in the real world.
The economist is interested in group behaviour and is concerned with the total demand for, say, bread rather than the amount purchased by any one individual. While the behaviour of any one person may be unpredictable, this is not necessarily true of the large group. The economist is able to make generalisations about economic groups (consumers, workers, shareholders) which are quite dependable guides to their expected behaviour.
Another problem facing economists is the complexity of the world they are studying — so many things are changing simultaneously. Natural scientist while carrying out laboratory experiments can ‘hold other things constant’ while they study the effects which changes in X have on Y.
Economists cannot do this. They cannot vary the quantity of money in the economy, hold everything else constant, and then see what happens. What they have to do is to assume that other things remain constant? Many propositions in economics begin with the phrase ‘If other things remain equal’ (called ceteris paribus).
From the vast array of facts observed, economists must identify those things which are important and study them in isolation. They have to abstract from reality in order to build a simplified model of the economy or a small part of it. Such a model shows how things are related to one another.
In fact, the influences surrounding real life situations are so many so varied that we cannot take them all into account. All that economists can do is to try to get close to the real world by extending their model to include more and more ‘other influences’ — but no one can construct or understand a model which includes everything.
Economic theories as such do not describe the real world as we see it. They attempt to show, one by one, the forces that operate within that real world.
Social sciences study aspects of human behaviour, and human beings can be very unpredictable. Economic laws have to be hedged around with all sorts of assumptions and qualifications (‘ifs’ and ‘huts’) and they attempt only to show general patterns of behaviour.