RELEVANCE OF

ECONOMICS IN
THE FIELD OF
SOCIAL SCIENCE

BSCE-3A
Social sciences include fields, such as
sociology, anthropology, and archaeology, but
differ from natural sciences, such as physics
and chemistry. Social sciences revolve around
the relationships between individuals and
societies, as well as the development and
operation of societies. Unlike most natural
sciences, social sciences rely heavily on
interpretation and qualitative research
methodologies.
Economics is a social science that studies the
production, distribution, and consumption of
goods and services. It is concerned with how
individuals, businesses, governments, and other
organizations make choices about how to allocate
resources.

Economics is concerned with how an economy and its

participants function and behave. Economics studies how
goods and services are produced, distributed throughout
the economy, and consumed by individuals and
businesses. Economics also is concerned with how
resources are allocated by governments and businesses to
satisfy the wants and needs of consumers.
 2 CATEGORIES OF
ECONOMICS
MACROECONOMICS
Macroeconomics focuses on how an overall economy and market
01 system operate. Macroeconomics studies the financial and economic
conditions that impact and economy as a whole. Some of the metrics
that are studied under macroeconomics include inflation, which is the
measure of rising prices in an economy, and gross domestic product
(GDP), which is an estimate of the value for all final goods produced in
an economy.

MICROECONOMICS
Microeconomics studies the impact of human behavior and actions as
02 well as how their decisions affect the distribution of resources
throughout an economy. Microeconomics focuses on how individuals
make certain choices, particularly when factors change, such as rising
prices.
Since economics is the study of human behavior, the main
problem is that economists cannot truly know what is going on
inside a person's head that determines how they will act based on
certain information, wants, or needs.
For example, if the price of a jacket jumps, but a certain
person buys it anyway, is it because they really like that
jacket? Is it because they just lost their jacket and need a
new one? Is it because the weather just turned really cold?
Is it because their friend just bought the same jacket and
is now super popular in her class? We could go on and on.
The point is that economists cannot readily observe the
inner workings of peoples' brains to understand exactly
why they took the action they did.

Therefore, instead of conducting experiments in real-time,

economists generally have to rely on past events to
determine cause and effect and formulate and test
theories. (We say generally because there is a sub-field of
economics that conducts randomized control trials to
study microeconomic issues.)
An economist cannot just walk into a store and
tell the manager to raise the price of a jacket and
then sit there and watch how consumers react.
Rather, they have to look at past data and come
up with general conclusions about why things
happened the way they did. In order to do this,
they have to collect and analyze a lot of data.
They can then formulate theories or create
models to try to explain what happened and
why. They then test their theories and models by
comparing them to historical data, or empirical
data, using statistical techniques to see if their
theories and models are valid.
THANK
YOU!