Edexcel A Level Economics A:复习笔记1.1.1 Economics as a Social Science

The Process of Developing Models


  • Economics is a social science
    • It studies societies and the human interactions within those societies
    • Human interactions are complex and are influenced by many variables
    • Social sciences also include subjects such as Psychology, Politics, Geography and Business Studies
  • Due to the complexities within societies, economists build models so as to better understand certain interactions
    • A model is a simplified version of reality
    • Some models are more complex than others. For example, the Circular Flow of Income model seeks to demonstrate the interactions of all economic agents (firms, households, government, banks, international trade) within an entire economy
    • All models make a range of assumptions. These are often generalisations about behaviour, choices and likely outcomes
    • These assumptions are necessary so as to account for complex human behaviour and constantly changing variables
    • When evaluating different models, the underlying assumptions should always be considered
  • To think like an economist involves identifying which variables will be studied and which ones will be excluded
    • It considers the type of relationship between variables (causal or correlation). For example, data shows that when ice cream sales increase, so do car thefts. Correlation, yes. Causation, no
    • Some economists will build an argument to include certain variables in a study and others will argue to exclude them. They will each provide a justification for their decision
    • Two economists analysing the same data may end up with vastly different interpretations. This is often due to the different variables that each economist chooses to focus on. This is the complexity found within social sciences

The Use of Ceteris Paribus

  • Due to the large number of variables that can influence any particular economic interaction in society, economists create models using the principle of ceteris paribus
    • Translated from Latin, ceteris paribus means 'all other variables remain constant'
    • It allows economists to simplify and explain causes and effects, even if the explanation is somewhat limited by the assumptions
    • For example, there are many factors that affect the level of unemployment in an economy (interest rates, consumer confidence, firms investment, government policies etc.).  However, using ceteris paribus, economists  can simplify the economic model to analyse just two variables (unemployment and interest rates). The analysis is conducted ceteris paribus. The analysis is conducted ceteris paribus. All the other variables remain constant, even when they are highly likely to have changed

The Inability to Make Scientific Experiments

  • The natural sciences use the scientific method to prove a relationship between two variables
    • Briefly explained, the scientific method includes the following steps
      • Define a question to investigate
      • Develop a hypothesis (make a prediction)
      • Conduct a test
      • Gather data
      • Analyse the data
      • Report the conclusions
    • If the relationship between two variables is proven, then as long as the test conditions are replicated, the conclusions to that experiment should be the same anywhere in the world.
  • The social sciences use a variation of this method called the social scientific method as there is an inability to make scientific experiments the results of which can be proven time and time again
    • This is due to the complexity of human nature and the significant number of social interactions that are taking place in any economy at any given point in time
    • The steps in the social scientific method are similar but there is a key difference
      • Define a question to investigate
      • Develop a hypothesis using ceteris paribus (make a prediction)
      • Conduct empirical research
      • Gather data
      • Analyse the data
      • Report the conclusions
    • Empirical research is collected through observations, surveys, opinion polls etc.
    • The results of the same hypothesis can vary significantly when conducted by different researchers at different time periods and between different places and cultures
  • Economic models are developed by economists once a hypothesis has been repeatedly proven or rejected in different circumstances.