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Economics

Economics

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Author: Diana Hasbun
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Tutorial

Economics is the social science that studies the behavior of individuals, groups, and organizations (called economic actors, players, or agents), when they manage or use scarce resources, which have alternative uses, to achieve desired ends. Agents are assumed to act rationally, have multiple desirable ends in sight, limited resources to obtain these ends, a set of stable preferences, a definite overall guiding objective, and the capability of making a choice. There exists an economic problem, subject to study by economic science, when a decision (choice) has to be made by one or more resource-controlling players to attain the best possible outcome under bounded rational conditions. In other words, resource-controlling agents must maximize value subject to the constrains imposed by the information the agents have, the their cognitive limitations, and the finite amount of time they have to take a decision. Economic science centers on the activities of the economic agents that comprise society.They are the focus of economic analysis.

 

An approach to understanding the processes of production, distribution, and consumption, through the study of agent behavior under scarcity, may go as follows: The continuous interplay (exchange or trade) done by economic actors in all markets sets the prices for all goods and services which, in turn, make the rational managing of scarce resources possible. At the same time, the decisions (choices) made by the same actors, while they are pursuing their own interest (their overall guiding objective), determine the level of output (production), consumption, savings, and investment, in an economy, as well as the remuneration (distribution) paid to the owners of labor (in the form of wages), capital (in the form of profits) and land (in the form of rent). Each period, as if they were in a giant feedback system, economic players influence the pricing processes and the economy, and are in turn influenced by them until a steady state (equilibrium) of all variables involved is reached or until an external shock throws the system toward a new equilibrium point. Because of the autonomous actions of rational interacting agents, the economy is a complex adaptive system.

 

The Association has about 18,000 members from all over the world, most of whom are working economists in academia, business, government, international and not-for-profit agencies. It was founded in 1885 to promote the study of economics from all points of view. "The Association as such will take no partisan attitude, nor will it commit its members to any position on practical economic questions." The Association publishes seven journals. About 4,000 libraries subscribe to the journals and individual members receive journals with membership. The Association also produces ECONlit, a database to identify and locate books and articles in economics. The annual meeting of the Association, usually in early January, attracts about eight thousand economists who present their work and discuss current economic issues. The Association recognizes with awards the achievement of a small number of economists who have made outstanding achievements in the advance of economic thought. The Association promotes the market for economists by helping employers find applicants and vice versa. The Association is headquartered in Nashville, Tennessee.