DEFINING ECONOMICS

There is no one definition of economics, although a useful starting point is the well established definition provided by Lord Robbins as long ago as 1932. He defined economics as ‘the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses’. At first reading this may appear a difficult definition to understand; however, if it is studied in more detail it can be seen to offer a useful insight.

We can dissect the definition as follows:

(a) Economics is a ‘social science’ in that it uses scientific methods to study human

behaviour.

(b) Human needs are unlimited whereas resources are in limited supply, hence the problem

of scarcity.

(c) The resources can be put to alternative uses in order to meet certain ends, such as the

building of a power station or a new hospital. Since resources are scarce, choices have to be

made as to how resources are utilised.

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