Should 'Scarcity' Be Part of the Definition of Economics?

Posted by: Michael Mandel on January 16

Every economics textbook seems to have a definition of economics right in the first chapter. And all the definitions seem to have something to do with scarcity. Here are some real examples:

Economics is the study of choices consumers, business managers, and government offical make to attain their goals, given their scarce resources.

Economics is the study of how people make choices under conditions of scarcity and the results of those choices for society.

Economics is the study of how society manages its scarce resources

Now, I’m doing an economics textbook for McGraw-Hill, and I’m thinking about using a different definition of economics, which doesn’t depend on scarcity.

Proposed definition: Economics is the study of the functioning-–and malfunctioning—of the economy, with the aim of improving living standards

My justification for a different definition is that there are big chunks of the economy where scarcity is not important, in any but a formal sense. If anything we seem to have an abundance of food and manufactured goods, and the cost of moving and manipulating information has fallen very very sharply. I’d also like to get in the sense that economics has a purpose.

Any thoughts?

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Reader Comments

Chris Dalby

January 16, 2007 04:05 PM

What happened to:

Economics: The study of the production, distribution and consumption of goods and services.

The law of supply and demand answers any "scarcity" issues.

Redefinitions of words are usually the result of efforts to manipulate the subject or the individuals who are the effect of that subject.

Ajay

January 16, 2007 04:45 PM

Perhaps scarcity isn't as big a deal anymore but I think the point that those definitions try to get across is that there are always constraints. One has to figure out the best way to do something based on some limited resources. If all resources were abundant to every person, they would be worthless and one wouldn't have an economy. Perhaps you could replace the word 'scarcity' with 'limited resources' or 'constraints'. As to your proposed definition, aren't you just passing the buck to the definition of the word 'economy'? You should probably put whatever you were going to use to define 'economy' in 'economics' instead. Also, I don't like your usage of the goal of improving living standards. That is one use of economics but not what everybody uses it for. Economics is such a big subject that it is difficult to pin down to one sentence. Why not make it a paragraph? Give yourself some breathing room.

Chris Dalby

January 16, 2007 04:47 PM

Economics is the study of choices consumers, business managers, and government offical make to attain their goals, given their scarce resources.

The next "redefinition" they will use will be something along the lines of "Economics is the study of the MORAL choices consumers........"

Joe

January 16, 2007 05:18 PM

I dislike your definition for several reasons, not the least of which is that it is too vague (what do you mean by "the economy?") and also normative. Certain people certainly don't study economics with an aim of improving living standards. In fact, I think that many economists starting with Adam Smith might find this motivation inherently suspect.

Economics as a discipline simply wouldn't exist without scarcity. Consumers and producers wouldn't be forced to make decisions about how they spend their time and money, prices wouldn't matter, and the most fundamental question of economics -- how resources are allocated -- would be irrelevant. Given that the entire field is built upon the existence of scarcity, to leave that out of the definition would be irresponsible.

Andy

January 16, 2007 05:39 PM

Re: food and manufactured goods, what there is a scarcity of is supply-chain management and ability to forecast demand. Plus, they do remain scarce in large parts of the world (esp. goods). Also, I think that many economists don't really care about improving living standards but see their role as dispassionate observers -- just as physicists don't see their role as improving the laws of nature.

M.T. Paige

January 16, 2007 09:06 PM

No matter how much of something there seems to be, all things are essentially scarce. I think scarcity is a key component of the definition.

Brandon W

January 16, 2007 11:29 PM

Perhaps you could replace the word "scarce" with "limited"? Here is a suggestion that combines your definition with the older ones, and with a little grammatical restructuring (I hate overuse of gerunds):
"Economics is the study of the function--and malfunction--of an economy, and how society manages its limited resources in its aim to improve living standards."

MrGoodrant

January 17, 2007 02:35 AM

Recall that economics is a social science, and accordingly two of the definitions Michael cites use the word "society." (The third itemizes society into consumers etc.) All three do also talk about scarcity, but societies have ways of dealing with resource scarcity that we do not usually think of as "economic," such as going to war to take other people's resources. So it's not enough to say that economics is about social behavior aimed at dealing with scarcity; we have to narrow it down and ask instead, What kinds of social behavior are truly "economic"? Those behaviors are then the proper province of economics.

My answer is that economics is rightly defined as the study of that uniquely human behavior that is the free exchange of one resource for another, i.e., trade. Think about it: All of the behavior that we think of as economic either directly involves exchange or is for the purpose of acquiring resources through exchange.

What about Robinson Crusoe raising crops for his own consumption on his desert island? Is that not an example of economic behavior that does not involve exchange? True, it does not, but it also does not meet the definition of social behavior, because it only involves one person, and we started by saying that economics is a social science. So, no, it does not fall within the definition of economics.

So my definition of economics is that it is the study of free, mutually beneficial exchange. Note that no invocation of "scarcity" is needed. Resources need not be actually scarce; benefits can occur even if resources are not scarce. What's essential is that there be exchange.

Note that this is consistent with the focus of Adam Smith's original work on the benefits of specialization, which only can be reaped if there is exchange. You would not survive long if you made only the goods you specialized in and did not trade some of them for others. And Ricardo's theory of comparative advantage seems expressly designed to show us that the opportunities for beneficial trade are more widespread than it might seem at first glance.

Joe Cushing

January 17, 2007 07:42 AM

1st. Don't use any form of the word economy in your definition of economics. Webster would have your tale.

2nd even food is scarce in the economic sense of the definition. If it were cheaper we would find other uses for it. Oh wait, we are trying find other uses for it. fuel for cars. Ahhh, maybe the word shouldn't be scarce. Use limited instead. Even the most abundant resource has a limit. I think the limit or scarcity is important even for food too because the price of corn is going up as we begin to use it for fuel.

MrGoodrant

January 17, 2007 11:21 AM

It was already 2:35 a.m. when I posted my comment above and I felt I had rambled on enough, but I really should have added this dismount:

It is no accident that these two founding fathers (Smith and Ricardo) of economics put exchange at the core of their theorizing. Exchange, not scarcity, is the essence of economics.

Michael Mandel

January 17, 2007 02:50 PM

I appreciate all the responses, and I will have more to say later (have to get out this week's magazine).

One thing struck me though..to me the concept of 'economy' logically precedes the concept of 'economics'. I think that most people have a good intuitive notion of what the "economy" is, without necessarily knowing economics.

Or am I too much of an optimist about that?

Brandon W

January 17, 2007 04:16 PM

Wow...
I posted a comment and actually didn't get accused of being Hugo Chávez. For once.

Craig M. Newmark

January 17, 2007 06:45 PM

I quarrel with your definition for two reasons.

1. It leaves too much out. Some of economics doesn't aim to improve living standards but has only the aim of understanding the world. A simple example is the woman who wrote a Seattle newspaper and wondered why Washington State apple growers seemed to be "shipping the good apples out". In reply, two noted economists formulated the Alchian-Allen theorem (http://en.wikipedia.org/wiki/Alchian-Allen_Theorem).

2. A good is scarce if more is demanded than is supplied at zero price. Absent government interference, scarcity implies non-zero prices. While food items and some manufactured goods may be abundant I don't see many selling for zero prices. Even most "moving and manipulating of information" is positively priced. Scarcity is still very important to economics.

pgl

January 17, 2007 07:22 PM

If we try optimization with no constraints, we get free lunch economics. I hate to say this Michael, but you just woke up an Angrybear.

trekbiker

January 17, 2007 08:57 PM

How about:

Economics: The study of the allocation of finite resources to the production of goods and services that are desirable to society.

The definition should convey that the resources though vast and diverse do have some limits without resorting to a word such as scarcity that freighted with such negative meaning.

KipEsquire

January 17, 2007 09:25 PM

Just because you can feed the world doesn't mean you can do it with a single flower pot.

Just because everyone can eat doesn't mean that everyone can eat at Le Cirque this Saturday at 8:15.

So scarcity, even for "non-scarce" goods, is still totally relevant, thank you very much.

M.T. Paige

January 17, 2007 11:18 PM

I actually really like Brandon W's definition...

Lord

January 18, 2007 12:07 AM

I just want to know where I can mail the bill for my groceries and the big screen tv I want.

bartman

January 18, 2007 12:40 AM

I teach econ to students for whom English is a second language. Trying to do that well necessitates having an acute awareness of the clarity of the meaning of the words I use.

There are both lay and economic meanings to the word "scarcity", and I believe Mandel is erroneously using the lay definition when he says "scarcity is not important." I find this a bit shocking.

If scarcity was "not a problem" then we wouldn't have to make trade-offs, or choices, and could have as much of whatever we wanted without giving up something else. That is patently wrong.

Also, using "economy" in the definition of economics reminds me of the joke:
Q: "What is economics?"
A: "It's what economists do."
Q: "What do economists do?"
A: "Economics."

Mike Mandel

January 18, 2007 07:27 AM

I've got an open mind here. Craig, you make two good points...thanks. In terms of scarcity, you are of course right by definition. Something has to be a binding constraint, even if it's just time.

But I'm just wondering whether "constrained optimization" or scarcity is really the most useful or interesting angle to approach economics with. Right now I have access to far more information, at a zero marginal money price, than I can ever consume (trust me...we in the MSM are living with the flip side of this right now). I could in theory set this up as a constrained optimization problem--time spent online versus time spent working. But solving the constrained optimization problem never would have shown me that blogging, say, or wikipedia, would be useful ways of organizing the flood of information.

As for the purpose of economics--I guess this is one thing that I'm chewing on. I'd find it more satisfying to say that economics has a normative goal, which allows us to differentiate more useful work from less. I know that most economists won't agree with me.

pgl--I don't mind waking up the angry bear on this topic, since you and I have such a fundamental disagreement here. I want to give you a full reply, but it will take a bit of time to formulate right.

Mike Mandel

January 18, 2007 08:06 AM

bartman,

I think the "economy" and "economics" are two different concepts...though it does raise the question about whether there's a good definition for "economy."

M.T. Paige

January 18, 2007 01:05 PM

I would call an economy an ecosystem in which resources are distributed.

Mike Reardon

January 18, 2007 02:03 PM

For me scarcity, price, and malfunctioning, are all only localized events, within the functioning economy. And I see individuals engaging in all economic activity with the purpose of maintaining or enhancing their living standard. Good discussion but it come down to I like functioning to describe economic activity, and just don't care for the word malfunctioning, I think you will find the editors at McGraw-Hill can do more for you than we can.

Patrick Egger

January 18, 2007 05:21 PM

Economics is the observation and measurement of the impact of the actions of participants within the economy.

F. Arntz

January 18, 2007 10:58 PM

Economics is the pursuit of an understanding of the interplay between (1) costs of production, (2) profits to the the owners of vendors and distributors, and (3) prices for the customers. Application of such understanding is the domain of economic engineering.

evergreen

January 19, 2007 08:45 AM

Scarcity is essential to the definition of economics.

The relevant point is that economics is no longer the appropriate body of knowledge to apply to the whole economy. Much of the economy has slipped out from under the purview of economic methodology. The error is not in the definition of economics, the error is that we have not yet developed a body of knowledge that is relevant to abundance. (I am working on it).

Frank Drake

January 20, 2007 01:39 AM

Economics is the study of the Macro economy with the aim of improving living standards based on technological innovation, currency safety, and long term health and lifestyle choices. Ideally the standard of living should increase faster than the consumption of resources, and the mortality rate should decrease at the same pace as the birth rate.
Economic independence should be a lifestyle choice
encouraged by all Citizens until their death.

BClark

January 20, 2007 11:31 PM

you can't eliminate scarcity from the definition of economics because if it wasnt applicable in this era everyone would be parking their Ferraris in their 6-car garages with their Bentleys and flying their personal jets everywhere. If everyone could have everything they wanted then you would be correct in your definition, but unfortunately scarcity is still inherent to the definition of scarcity.

Alex Roberts

January 21, 2007 07:27 AM

I taught economics for 25 years and a good definition of "economics" was always an issue. I now have more than 100 definitions in my database. However, what was obvious to me at the very start was that simpler was better, and "scarcity" should be a part of any definition.

My favourite has to be: "Economics is the study of how society uses its scarce resources." And most of my students agreed that this definition covered the essence of the science.

bk

January 22, 2007 09:20 AM

why are you afraid of scarcity? what is "wrong" with using that term in the definition? your original post seems ill-conceived due to your statement that 'economics, which doesn't depend on scarcity.'

Scarcity, though abstract, is not unreal. It is very real. Not to mention a much more appropriate term for your definition than 'economy' is.

Mike Mandel

January 22, 2007 02:25 PM

Oh, I'm sure scarcity is real, if you mean that some constraint has to be binding. For example, my time will always be scarce, in the sense that there is no more than 24 hours in the day. So that's the ultimate scarcity, no matter how many piles of 'stuff' I have.

But here's another question...if 'scarcity' is such an important concept, why does the term only appear once in many textbooks--in the definition of economics?

Brandon W

January 22, 2007 04:29 PM

It seems to me that the terms "scarce" or "scarcity" amount to jargon, since outside the field of economics they hold connotations that are outside the scope of their meaning to economists. Jargon should never be part of a definition; particularly to newcomers to a subject. This is why I would argue for the use of "limited" over "scarce". I still stand by my adapted definition from earlier, but another might be:
"Economics is the study of how societies allocate, trade, and consume their limited resources and production."

Alex Roberts

January 22, 2007 11:34 PM

I can live with "limited" over "scarce."

"Economics is the study of how societies and individuals use their limited resources," is short, snappy, and easy to remember. Both the general public and economics students alike would understand it, and immediately be able to form a mental image of the subject; or the concept when someone uses the word "economics" in general discussion.

Mike Reardon

January 23, 2007 03:42 PM

Economics is our/the study reguardless of the conditions in effect of the economic processes of selection and adjustment within economic avitvity. Both abundance and scarcity are only present local condition in economic avitvity, they do define a present study of condition in local settings. Today adjustments and disposistion to abundance is a more present Western and Eastern economic concern, but again this is only a present condition within local economic activity.

Zephyr

January 24, 2007 11:47 PM

Without relative scarcity there is no economics.

Joe Cushing

January 29, 2007 01:52 AM

After the initial definition including scarcity the concept is communicated through the concept of supply. Labor is the ultimate scarcity. The supply of and therefor the price of everything is tied to it. The marginal cost of labor is always higher than the average cost so scarcity is always in play.

I think scarce is the wrong word though. Scarce implies that it is rare or hard to find. What they really mean is Limited. I think if you substitute limited for scarce it works. A resource can be abundant/not scarce but it cannot be limitless.

Miracle Max

January 29, 2007 03:01 PM

In Adam's Fallacy, Duncan Foley makes the point that scarcity is about allocation in a market setting, and without markets the scarcity framework is inadequate. The classic example of diamonds v. water, for instance, doesn't work in the setting of futures markets that are incomplete or don't exist.

On a more mundane level, textbooks are leading off in different ways to try and grab the attention of students. Some macro texts begin with growth models, for instance, not exactly in keeping with the scarcity concept.

M Karskens

January 29, 2007 06:56 PM

"I dislike your definition for several reasons, not the least of which is that it is too vague (what do you mean by "the economy?") and also normative. Certain people certainly don't study economics with an aim of improving living standards. In fact, I think that many economists starting with Adam Smith might find this motivation inherently suspect."

Have you ever actually read mr Smith?!
Your reply to the elematary scholars task of defining economics is unsurprisingly hostile. Not surprisingly since your motives for studying economics appear to be the exact opposite as were mr Smiths for writing his inquiry.

However, I think much of the replies do point one to the conclusion that modern economics has less to do with the public good as with proving the internal consistency of abstractly formulated logical models. Sir, your definition does tend toward a definition of " political economics."

I wish you much inspiration and insight in writing your textbook.

P Gooden

February 2, 2007 05:31 AM

I would be very interested in reading the your thoughts about this proposed subject. I have often thought that one of the many failures of our economic models it that it presupposes that all decisions are made for the sole purpose of profit. I have personally struggled with this and would argue to my last breath that this is not nor is it ever the sole basis for steering decisions. Therefore does that mean that all if not most economic theories are flawed?

Mike Mandel

February 2, 2007 01:10 PM

All very useful thoughts..I'm going to ponder this.

lanyu

February 3, 2007 09:24 PM

scarcity is surely a part of economics.
in your example, although there are lots of goods which brings the price down, and it seems to have nothing to do with scarcity. However, in this case, money is a scarcity, which is the reason that price is a real matter.
what's more, the origin of economics have the concept of scarcity.So if you care about the history of economics, scarcity should be contained.

Zephyr

February 4, 2007 05:05 PM

Economics is all about relative scarcity.

Kevin

February 6, 2007 11:52 AM

I'm a little late to the thread but my critique:

1) My pet peeve is including the word "Economy" in a definition of Economics. That's EXACTLY like saying "Mathematics is the study of Mathematics." Which is not terribly helpful. If you don't know what Economics is, you probably don't understand what the Economy is.

2) Your value injection about wanting to improve living standards is totally inappropriate. You want REAL scientists to laugh at you? "Physics is the study of Physics for the purpose of making puppies happier?" If an individual Economist wants to use his knowledge to make life better that's fine, but the science is about observation and understanding, not having an agenda. "Economics" has no aim except understanding, well, "Economics".

3) Finally, my own definition is elegant and simple and should immediately be enforced by federal law and the use of brutal re-education camps for Econ PhDs:

"Economics is the study of how people organize and manage themselves and the resources available to them in order to satisfy their material needs."

Eric

February 16, 2007 02:52 PM

I always liked to think of economics as the science of optimal choice. making the choice, given the resources, that best optimizes output and societal benefit.

Khaldoun Rayess

April 3, 2007 10:34 AM

I am sure that you are coming with something ancient-new. There are big gaps between nations in our days for that each nation should study economics on her style. For example,scarcity is nonsense in the US, because a US citizen consumes 5times as any other human in the world. While in Africa, scarcity is something in their life, dealing with it wisely is the only way to ensure life.

I would like to more deeply discuss this with you, if you have time or interest, please email me to the above mentioned email... I have a lot of examples and stories to share :)

Anyway, thanks for this new wise idea.

Rayess

Leo Murembya

April 3, 2007 10:40 AM

In my classes, I use the definition that Economics is "the study of the production, distribution and consumption of goods and services." But, one cannot go around the scarcity issue as we are limited in many ways. Even if we assume that all other resources are abundant, we will see be limited by time and we will have to make decision with constraint in mind.

James Anderson

April 10, 2007 10:37 AM

It is true that Economics is how we use limited resources, but one has to also consider technology in the equation. We all know that limited resources leads to rising prices but technological improvements has lead to declining prices in some products.

Chris

May 22, 2007 02:47 PM

Economics is the study of how people deal with scarcity. There's no other way around it. Everything is scarce but water I think. I guess water could be scarce at some time, but isn't know. Economic goals including improving life and living standards, yes, but that's not what economics is. To say a reasource isn't scrace is to say there's an infinite amount to it, and that's just not true. Water is the only thing that isn't scrace and thuse should have no price. Everything else has a cost because of scracity. Name a thing with a cost that isn't scrace. You can't!

chris

May 22, 2007 02:53 PM

Supply and demand does not answer the scarcity issue. Supply and demand allocates resources efficiently. If resources were not scrace, there would be no reason for supply and demand.

You really can't look at it any other way. If things were not scrace, that would imply things were unlimited. It's really absurd. That would imply, amoung other things, that time does not exist and life was endless. Because if life has an end, then time is obviously VERY scrace.

Teddy Douglas

July 15, 2007 05:05 PM

Please don't ever ever define economics as "the study of the economy". It is circular and adds little to our understanding of the subject. And as many of the other commenters already pointed out, scarcity still lies at the foundation af any study of economics. Even in areas where scarcity would seem irrelevant, such as the music industry where a single song in mp3 could be reproduced limitlessly at almost no cost, or the internet where it doesn't take much for anyone with some basic programming knowledge to create a search engine, the study of the allocation of scarce resources can still be used to explain why Destiny's Child earned $25 million last year or why Google stock is selling at over $500 a share.

Step[hen Herdina

July 17, 2007 04:51 AM

Economics is the study of what is produced; who produces it; and who gets to use it.

Rick Fenner

July 19, 2007 06:31 PM

You state that we have an abundance of food as proof that scarcity is not that important and won't be in your definition of economics. But recently there have been numerous articles linking the rise in the production of corn based ethanol in the US to higher prices for ice cream, chicken, soda, and pizza (mozzarella cheese). What this shows is that corn is a scarce resource.
I tell my students without scarcity, there would be no need to study economics.

Eric

July 20, 2007 04:54 PM

"Economics is the study of what is produced; who produces it; and who gets to use it"

it also deals with how the "something" is used, and the effects of using it.

Tom

August 3, 2007 12:24 AM

An impressive list of comments. One might be led to believe that this is important.

I wonder what economists would do if we had to produce something more like a noun, something that you could drop of your foot.

Matt

September 7, 2007 02:30 AM

They'd prolly make some sh*t, then start talking about why there is a demand for toilets, and draw a graph about what happens to the demand curve when the niche market for porcelain toilets becomes impacted by the recent technological innovation of synthetic porcelain; after which they would reference an elasticity function for the industry resulting from a lowered Fed rate causing a macroeconomic problem affecting toilet producers and local school budgets nation-wide concluding "This is the economy 'n the shxtter"

Ross

September 11, 2007 03:18 AM

It's interesting that none of the comments seem to address issues of the environment and sustainable development, yet economics as practised by economists is having a profound impact on these aspects of the world in which we live. It seems misleading to think of "the scarce ability of the atmosphere to absorb CO2" or "biodiversity as a concept to which we can apply concepts of scarcity" or "water as scarce when the oceans are full of it" and so on. Yet economics directed to consumption, production, growth and maximisation of welfare are contributing to the coming of a crisis that, many feel, threatens the security of our kids and grad-kids. We should be worried.

I like Michael Mandel's definition. It opens economics up to allow it to address the much bigger welfare picture than consumption maximisation and resource budgeting can contemplate.

Michael

September 22, 2007 07:44 AM

Economics is usually defined as the problem of how best to distribute limited resources, limited because wants are characterised as unlimited, but common sense tells us that rather than limited resources, there is an abundance of resources. The difference is one of perspective and this is core to any alternative understanding of economics. If wants are the focus, then of course resources are limited by definition, but if minimum needs or essentials are used as the foundation, then resources are seen to be abundant. The difference is between a description and an explanation. A focus on wants or desires describes a market situation, while a focus on essentials or needs allows an explanation of choices to begin.

It is necessary to shift the basis of economic theory away from assumptions of scarcity and onto that of the reality of high production if a rational explanation is to be found as to why certain activities are profitable and others, despite their desirability on social or moral grounds, are not.

This begins with the understanding that an abundance of resources means that not all need to work productively and that some use more resources than others. Who shall be the lucky ones and how to keep the unlucky quiet is fundamental to the running of most economies. Abundance is therefore an economic problem because the choices opened up by having more resources than is strictly needed to live presents a danger to those processes of production and the command that some have over resources that created the abundance in the first place.

Why does so much waste exists along side so much poverty in the world? The orthodox assumption of scarcity has survived even the staggering levels of surplus of modern economies because this assumption suits the needs of those who command resources and who prefer to ensure that the economy does not become democratised; that unpleasant tasks are done by someone else, that some win and many lose.

An Economic theory based not on scarcity but on abundance is a theory that seeks not to describe distribution but to explain choices. The development of such a theory would undercut the dominance of those satisfied with the current methods of production and control over resources. It would do so by revealing the choices made to limit the production of essentials and to divert resources to the production of luxury and fashion goods. A distribution of resources currently labeled 'scarcity'.

sajjad ahmad khan

February 7, 2008 02:10 PM

economics is the study of scarcity, because these are the people who deals with the resources of entire world . the option for dealing with scarcity is how to produce , how to improve the resources and how to reduce the expectation of the ordinary life of people. economic is the study of scarcity because human behavior has the tendency to consume.what we need the equilibrium but it is not possible because its the people of the states who want to hold and the balance is not taking place in every economy. resources are scarce therfore we are studing economics . economics give us this hope to improve the standard of living further and use the resource in such a way to get equilibrium

Keith

February 9, 2008 06:57 PM

I wound up on this site after searching for an answer to the same question. I am a philosophy professor, and weekend economics warrior. I came across a textbook that is being used by a colleague in the economics department that claimed, as many here are, that economics is a “science” that deals with allocating scarce resources in the face of the unlimited desires of individuals.

That definition seems to me to be both limiting and implicitly value-laden; or, as one respondent here would say, “normative.” At any rate, a definition like that would end any argument over the question concerning whether economics is or is not a “science.”

First, if you are limiting economics to only situations of scarcity than economists would have nothing to say about oversaturated markets, and that seems intuitively ridiculous. It is simply not the case that in the face of overproduction we would find other things than what is intended with that commodity; rather, in a capitalist economy that becomes one of many potential factors in a deflationary downturn. In the past when this occurs politics has entered into the picture, and often times some way of destroying the excess is carried out to force scarcity. The reason is to prop up profit making. It seems to me that economists should have something to say about this phenomenon, no?

It seems to me that the definition in question is confusing economics in general with one possible form of economics: market capitalism. In a market capitalist economy profit making occurs relative to demand, which is another word for scarcity.

Second, the assumption that human beings have unlimited desires seems to me to be projecting the symptoms of an obsessive-compulsive neurosis onto our entire race. If such a being exists at all it would have to be someone who is being targeted by Western advertising and then interpolating the desires of the ideal consumer from that particular medium. Or am I the only human being on the face of the earth who feels pretty satisfied with what I have?

Thanks for your patience folks.

josett duran

May 9, 2008 02:11 AM

is it safe to say that if ther is no scarcity there would be no subject called economics?

josett duran

May 9, 2008 02:12 AM

is it safe to say that if ther is no scarcity there would be no subject called economics?

oshinie

October 4, 2008 11:01 AM

hey, economics is one of my best subjects, I really love the subject. One thing I understand in the economic subject is that there is a limited amount of resources to satisfy the needs of human beings and this is the meaning for me as scarcity.

SK

October 19, 2008 02:40 AM

Michael, what a great question and purpose generating very interesting thoughts and reactions!! I just started a course in Economics and ran smack dab into a similar dilemma. I'm unsure why or how ethics has become a separate subject rather than a component of everything we study since it is relevant to everyone and hence to all disciplines.

The first question in Economics was "What opportunity costs did you incur this week? What economic choices did you make, and why did you make these choices?"

Here's my response, "What seemed like such a simple question brought me to some major introspection. Based on the textbook’s definition of opportunity costs as the "most desired goods and services that are forgone in order to obtain something else," (p.6) I must admit I have incurred none. However, I do make choices, including economic ones everyday. I choose how much time to spend with my family, working, at school and playing. I choose what clothes to wear, what food to eat and what exercises to do. I choose how to communicate with others, what to read and how much effort and energy to put into everything I do. My choices are very much determined by my perspective which is created from my values and goals. Our Success Strategies text, From Master Student to Master Employee, starts us off with a section entitled “Discover your values.” Applicable to this course is the paragraph that states, “Practical people are those who focus on time and money. And managing these effectively calls for a clear sense of values. Our values define what we commit our time and money to” (pp.11-12). Also, our values very much determine whether we see the glass as half full, half empty or in a constant state of running out.

I’m unsure if it is this textbook specifically or Economics in general that sees a glass that is almost always on the brink of having no water at all by defining economics as the "study of how best to allocate scarce resources among competing uses" (p.6). It is difficult for me to see parameters as restrictions or choices as sacrifices. For instance, time is an equal opportunity, nonrenewable resource that cannot be saved (Toft, Doug, ed. From Master Student to Master Employee, 2007, p.95). Knowing time is limited allows us to be creative and efficient to get much done in the time we have. Choosing to spend a couple hours on this one post may seem odd. An economical point of view might state the case that it would be better to spend less time on this discussion post since it is a small part of the overall grade and more time prepping for the projects that are a larger part of the grade or in core classes for my discipline. However, my values which include a “be here now” point of view say, “I will give 100% to everything I choose to participate in at work, school or home, so that if I died tomorrow, I will have lived fully today.”

I think it important that we look at perspective and values while we discuss economic strategy and policies. It is most likely that individual and country values help determine what choices and economic policies each person and country adopts. This is definitely going to be a thought-provoking class."

Perhaps, MIchael, yours can be the 21st Century definition making "improving living standards" a core part of economics.

ronen sander

October 25, 2008 05:44 PM

resources are only tools to serve the goal of economy.
Moreover, scarcity is to obvious since there are no unlimited resources - even sun and air.
Demand and supply is the major equation in economics discipline.
therefore:
here is the basic roll of economics which covers under its wings any other defenition:
"the roll of economy is sustainable increase of society's aggregate utility"
any allocation of resources is done for the above purpose.

barun thapa

October 31, 2008 05:33 AM

we are the student of the class 11 here we want to find out the definition of the great economist like marshall,smith so we would like to request about the link definition and the actual definition which would be approciate for the examination to write.

barun thapa

October 31, 2008 05:35 AM

we are the student of the class 11 here we want to find out the definition of the great economist like marshall,smith so we would like to request about the link definition and the actual definition which would be approciate for the examination to write we also want to know about the micro economic and macro economic

Elena

November 12, 2008 02:48 AM


Its hard to find a definition from Smith as there was no such thing as economics and it was mainly referred to as Political economy. Smiths main work was in defining wealth so I think his definition would revolve around the distribution of wealth.
Marshall was more about the demand and supply of factors so his definition of economics would more be about that. The marginalist framework of Marshall would probably fit more into the scarcity definition.

The idea of ethics in economics has been sort of separated into politcal economy so I guess that is why the definition has become so well mathematical. The neo-classicist or marginalist tried to fit economics into a more mathematical framework so I guess that is why there is no ethics

Personally I think maybe the definition of economics should maybe fit more of the role of agents, and but I think scarcity is still important. I still think the idea of unlimited wants, limited resources, while broad is crucial to pinpoint what is economics. Sure there are many other different sectors to economics like development economics and game theory. But i still think these rely on this concept.

nsumba.w.charles

January 28, 2009 05:45 AM


i can say there are very bright answers. plse continue supporting me in economics questoins.

nwoko kingsley

February 5, 2009 05:13 AM

pls, the assignment is that;Economics imay defined as the allocation of scarce resources among competing ends.examine.pls send the answers to my email

emilia

February 6, 2009 06:40 AM

Economics may defined as the allocation of scarce resources among competing ends

peter kahale

February 19, 2009 03:18 AM

I realize now that economics isn't all about scarcity since even if we would have all things free,not all people would have those things because of nature, that is a nature, so scarcity is not a problem any more, but it's because of nature ,therefore in order to understand the scope of economics it wil be better to TO DEFINE IT interms of what do wehave at a point intime so as to utilize it according to environment to maximize a certain standard of living that will cause people to be satisfied.

Jim Phoenix

July 2, 2009 05:49 AM

I am not an economist, but I am an American engineer with a master's degree in business. I live most of the time. In my spare time I tutor Chinese high school student in English.

One of my students wants to study economics so I wanted to incorporate that into my curriculum.

I have spent a lot of time looking for a basic definition and the various pieces of the so called science.

I found nonsense for the most part. I know a little of Adam Smith but would never use scarce as part of a definition.

For me it is about wealth of countries and how the production of goods and services, government policies and the use of resources, along with trade affect the GDP, the standard of living and the stability of a country.

Tell me if I am nuts! I am not impressed by the egghead definitions I have read. Are all economics so called professionals drinking the same cool aid?

Jim Phoenix

July 2, 2009 08:58 AM

Again I don't want to be disrespectful, but Mike Mandel and others do not seem to have a clue outside of academia!

Get into the reality of what the world is about. It's commerce, wealth, trade, goods and services, GDP and how the governments affect the economy.

If economics is defined in these terms everything would be clear and we could start teaching in realaties, not some outdated theories that people cannot understand.

Jim Phoenix

July 4, 2009 02:04 AM

I omitted some information in my first message. I spend most of my time living...in China. I work by my self in electronics which are sold primarily into the education market in the U.S.

In my spare time I teach English and as I said, one student is interested in economics.

By the way The Economist is my favorite publication.

Where can I find an outline of all the facets of economics. I understand economics, but it would be helpful to down load a simple outline that my student can understand.

Believe me, when you live in the Far East you get a different, even startling prospective of everything including the world economy.

sanjiv lakra

July 8, 2009 12:47 PM

The word "scarcity" is rightly used to define economics. It's simply because economics deals with the management of the scare resources in its optimisation of utility.
perhaps economics is the art of managing the scarce means in the process of sustainable development of the any economy

Trevor Johnson

December 1, 2009 11:02 AM

I’m surprised that no one so far has mentioned the words of Peter Drucker in ‘Concept of the Corporation’ published in 1946, “This theory of monopoly, which is still widely accepted as gospel truth, rests on the assumption - correct in the eighteenth century - that supply will always be limited, whereas demand will always be unlimited. But under modern industrial conditions, it is not supply that is limited but demand; supply in modern mass-production industry has, by definition, no limitations.” Surely these words are even more true today.

The books used in business schools to teach the subject of economics still say, “at the very core of economics is the undeniable truth called the Law of Scarcity This law states that goods are scarce because there are not enough resources to produce all the goods that people want to consume.” According to economists “all of economics flows from this central fact”. If Drucker is right, and he has been shown to be correct on more than one occasion, and the Law of Scarcity is no longer valid, what chance does the rest of the ‘science’ of economics stand of being right about anything?

I’ve always questioned the use of the word ‘science’ in connection with economics. Once upon a time I was a scientist, a chemist. Chemistry has rules, rules that are discovered by experimentation, and apply under all circumstances that are the same e.g. you mix A and B at a certain temperature and you get C, no matter where you are in our world. Does the same apply in economics?

The book I am writing will bring economics (and economists) into today’s real world.

Agayo Joshua

January 28, 2010 10:05 AM

The study of economics would have been unnecessary if resources were available in abundant true or false i need an answer with reason

Thank you for your interest. This blog is no longer active.

 

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Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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