Defining Economics

 Defining economics

One of the founding fathers of economics, Alfred Marshall, advised as follows:

Every short statement about economics is misleading (with the possible exception of my present one).

Nevertheless, definitions are a useful place to begin. A standard definition of economics could describe it as:

a social science directed at the satisfaction of needs and wants through the allocation of scarce resources which have alternative uses

We can go further to state that:

economics is about the study of scarcity and choice

economics finds ways of reconciling unlimited wants with limited resources

economics explains the problems of living in communities in terms of the underlying resource costs and consumer benefits

economics is about the co-ordination of activities which result from specialisation

By extension of our basic definition, economics as applied to agricultural and environmental issues is concerned with the efficient allocation of natural resources to maximise the welfare of society.

There is an obvious need to understand the economics behind the decisions facing the individual farmer, firm or resource owner, but it is also important to have an appreciation of the bigger picture in terms of agriculture and the environment's impact on the domestic economy as a whole, as well as its impact in an international context. The economics of the individual agent's decisions about resources is referred to as microeconomics, while macroeconomics studies the interactions in the economy as a whole. Our focus here is on microeconomic theory.

The role of economics

Resources are finite, and people and governments must make choices. By studying the way that people make choices, the better choices we make!

Economics has quite an extensive role to play in a multitude of contexts, particularly in solving agricultural and environmental problems. For example, it has much to contribute to improved policies for the efficient targeting of agricultural subsidies, the control of pollution and the depletion of natural resources