Economics as a Social Science
Economics: Edexcel A A Level, topic 1.1.1
Economic Methodology and Ceteris Paribus
Economics is considered a social science. Economists develop models to understand behaviour. However, it is impossible to perfectly recreate everything. Therefore, models are based on a set of assumptions.
Thinking like an economist
- Economic methodology is similar to that of other social sciences:
- Models and theories are used to explain real world evidence.
- These models use real life data and can be used to make forecasts about the future.
- Statistical analytics can be used to test hypotheses against evidence.
- Nearly all models rely on assumptions and simplifications.
Inability to make scientific experiments
- Controlled laboratory tests aren't possible. In real life, economists can't keep variables constant.
- Therefore, economists build models based on a set of assumptions.
Ceteris Paribus
- Economists rely on the ceteris paribus assumption. This means 'everything else remains equal'.
- So when economists study the relationship between two factors, they'll assume that one factor changes while the rest stay constant.
- This is the most important assumption for economists to create functioning models.
Test yourself on Economics as a Social Science
What is the meaning of 'ceteris paribus'?