Nature and Scope of Economics

Nature and Scope of Economics:

Scope means province or field of study. In discussing the scope of economics, we have to indicate whether it is a science or an art and a positive science or a normative science. It also covers the subject matter of economics.

  (i)Economics- A Science and an Art:

a) Economics is a science: Science is a systematized body of knowledge that traces the relationship between cause and effect. Another attribute of science is that its phenomena can be measured. Applying these characteristics, we find that economics is a branch of knowledge where the various facts are systematically collected, classified and analyzed. Economics investigates the possibility of deducing generalizations as regards the economic motives of human beings. The motives of individuals and business firms can be very easily measured in terms of money. Thus, economics is a science.

Economics-A Social Science:

In order to understand the social aspect of economics, we should bear in mind that labour are working on materials drawn from all over the world and producing commodities to be sold all over the world in order to exchange goods from all parts of the world to satisfy the

wants. There is, thus, a close inter-dependence of millions of people living in distant lands unknown to one another. In this way, the process of satisfying wants is not only an individual process, but also a social process. In economics, one has, thus, to study social behaviour i.e., behaviour of men in groups

b) Economics is also an art: An art is a system of rules for attainment of a given end. An art is a technique of doing things. Economics not only tells us about the facts but also tells us how to get best from it. It offers optimal solution to the economic problems. Thus economics is both a science as well as an art.

 (ii) Positive and Normative Science

a) Positive Economics

The study of economics based on objective analysis. Most Economists today focus on positive economic analysis, which uses what is and what has been occurring in an economy as the basis for any statements about the future. Positive economics stands in contrast to, which uses value judgments. Positive economics is a branch of economics that focuses on the description and explanation of phenomena, as well as their casual relationships. It focuses primarily on facts and cause-and-effect behavioural relationships, including developing and testing economic theories. As a science, positive economics focuses on analysing economic behaviour. It avoids economic value judgments. Normative economics is a branch of economics that expresses value or normative judgments about economic fairness. It focuses on what the outcome of the economy or goals of public policy should be.
b) Normative Economics: It makes distinction between good and bad. It prescribes what should be done to promote human welfare. A positive science gives statement that is facts whereas a normative science gives value judgements and is ethical in nature. There is 8% unemployment in India is a positive statement it can be verified from the facts thus it is positive statement. Unemployment is very high in India is a normative statement. Thus Economics not only tells us the facts but also suggest remedies therefor it is both positive as well as a normative science.