What is Economics?

A wonderful question indeed!

What is economics? I do not think there is one definition. People from different professions with different viewpoints would have their own definition on this, each not being wrong. We will look at what our reputed sources say followed by own definitions.

Wikipedia gives the source of its definition at Online Etymology Dictionary. It defines it as

1530s, "household management," from L. oeconomia, from Gk. oikonomia "household management, thrift," from oikonomos "manager, steward," from oikos "house" (cognate with L. vicus "district," vicinus "near;" O.E. wic "dwelling, village;" see villa) + nomos "managing," from nemein "manage" (see numismatics). The sense of "wealth and resources of a country" (short for political economy) is from 1650s.

To put in simple words, the above definition means "managing a household". Another definition of economics albeit with a different usage reported at same source is

as a term in advertising, at first meant simply "cheaper" (1821), then "bigger and thus cheaper per unit or amount" (1950).

 Answers.com defines it as:

The social science that deals with the production, distribution, and consumption of goods and services and with the theory and management of economies or economic systems.

Another one that is worth noting from ingrimayne.com is:

One of the earliest and most famous definitions of economics was that of Thomas Carlyle, who in the early 19th century termed it the "dismal science."

At the turn of the century, Alfred Marshall's Principles of Economics was the most influential textbook in economics. Marshall defined economics as

a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing. Thus it is on one side a study of wealth; and on the other, and more important side, a part of the study of man.

I have had enough of them. Let me put forth my views!

Image Credit: ScienceAmigo.Com

As I opened my textbook on economics written by Harvard Economics Professor Gregory Mankiw, I found another one. Well, you may check Gregory Mankiw's blog on interesting economic reads and I highly recommend his book if you want in an easy to understand language. Economics is no doubt all about supply and demand. The definition given there was

Economics is the art of managing unlimited demand (human wants) with limited supply (resources).

Sure, that one did make sense and was an interesting one. Then our professor of economics, Prof. Azhar Khan, who teaches at Gokhale Institute of Political Economy, Symbiosis Institute of Business Management and Symbiosis Institute of International Business (all located in Pune) came with a definition of his own and was by far one of the best teachers I have ever had. It was

Economics is the sum effect of social structure, historical accidents and prevailing social attitudes.

In the first lecture, his elaboration was convincing. India's social structure of castiesm which ensured a few perennially rich and few perennially poor, separation of Pakistan which was a lucky historical accident, and the prevailing social attitudes where youth philosophy comes in the picture would all determine India's economy.

In my Std. IX, I remember Economics as a subject coupled together with Geography (Oh, see the effect, I still write subject names in capitals) in one textbook. It was in the syllabus of Maharashtra Board in India. It had a very simple definition that I found appealing.

Economics is the study of sources of income.

That's it! That's how economic problems and financial problems differ. If you are jobless, it is an economic problem as there is no source of income, if you have money in bank but cannot withdraw it out due to bank holidays, it is a financial problem. Sure, that was at school level but it help explained a lot. Sectors of the economy like services, agriculture, manufacturing, trade, etc were a part of economics whereas jargons on stock market, money markets, bonds, equity, derivatives, etc. were a part of finance. The lesser said on accountancy or book keeping, the better!