Utrecht School of Economics Utrecht University July 2008
Content 1. The Character of Modern Science 2. Genesis and Development of Economics as a Social Science 3. Multidisciplinary Economics, an Introduction 4. Some Basic Sociology for Economists 5. Appendix Answers to test questions
This reader is an attempt to define economics as a social science. In the first place, economics is a science. In the second place, economics is a social science. In the third place, economics has a typical function in the whole of sciences. The practical problem of poverty – more theoretically: of scarcity – is the typical economic problem. People are motivated to reduce it as much as possible. However, the way people solve their economic problems is highly interrelated with the way they solve the two other primary human problems. These other problems are the social problem, as studied by sociology, and the psychic problem, as studied by psychology. Of course humans have many sorts of problems, but they can be derived from the three primary ones. In this reader some attention is also paid to the moral and the political problem, both derived from the primary motives. In chapter 1 we discuss the question what we mean by science. The term has high status, and it is very important to understand the procedures leading to the label ‘scientific’. In chapter 2 we sketch the way social science was developed from moral and political philosophy. The history of the methodology – the way knowledge is constructed - as applied by social science, is at the centre of this story. In chapter 3 the interrelationship between the three primary human motives and the partial analyses that are based on them, is discussed. Orthodox economics is presented as the analysis of the typical economic motivation or force, isolated from the operation of the two other primary motivations or forces. Multidisciplinary economics is presented as an empirically relevant type of economics, since analyses of the social and the psychic problem are incorporated into the model. In chapter 4 an overview is given of four main sociological approaches. By means of a series of practical cases it is shown that problems in the economy can be interpreted from a sociological point of view. It becomes increasingly clear that all practical human problems have an economic, a social and a psychic aspect. Therefore typical sociological and typical psychological interpretations are valuable when interpreting real life economic problems. In the future this reader will be extended with a chapter on “Psychology for Economists”, and with analyses of the interactions between the operation of the three primary motivations or forces. The final goal is to offer a theoretical instrument by means of which we can observe and explain human behaviour. Like astronomers who need a telescope and chemists who need a microscope, so need economists and other social scientists a scope to observe what people are actually doing. Without such a theoretical instrument it is impossible to detect anything of value, making it also impossible to develop policies that must improve the situation. The development of such an instrument is one of the main goals of the project of ‘multidisciplinary economics’ at the Utrecht School of Economics. Marc Schramm, coordinator of the course “The Multidisciplinary Economics Approach to Economic Growth”, delivered valuable comments on an earlier version of the texts. It goes without saying that he is not responsible for the texts as they are printed now. Piet Keizer
I The Character of Modern Science
1. Practical Problems Human behaviour is a mixture of habits, deliberate actions, emotions and thoughts about practical and theoretical problems. Part of our behaviour is unconscious most of the time. Every day we take many decisions that we experience as unproblematic. Often we even like to have the opportunity...