economics

Social science devoted to studying the production, distribution, and consumption of wealth. It consists of the disciplines of microeconomics (the study of individual producers, consumers, or markets), and macroeconomics, (the study of whole economies or systems - in particular, areas such as taxation and public spending).

Economics is the study of how, in a given society, choices are made in the allocation of resources to produce goods and services for consumption, and the mechanisms and principles that govern this process. Economics seeks to apply scientific method to construct theories about the processes involved and to test them against what actually happens. Its two central concerns are the efficient allocation of available resources and the problem of reconciling finite resources with a virtually infinite desire for goods and services. Economics analyses the ingredients of economic efficiency in the production process, and the implications for practical policies, and examines conflicting demands for resources and the consequences of whatever choices are made, whether by individuals, enterprises, or governments.

Microeconomics and macroeconomics frequently overlap. They include the subdiscipline of econometrics, which analyses economic relationships using mathematical and statistical techniques. Increasingly sophisticated econometric methods are today being used for such topics as economic forecasting. Pioneers in this field include Ragnar Frisch and Leonid Kantorovich.

Economics aims to be either positive, presenting objective and scientific explanations of how an economy works, or normative, offering prescriptions and recommendations on what should be done to cure perceived ills. However, almost inevitably, value judgements are involved in all economists' formulations.

Economics came of age as a separate area of study with the publication of Adam Smith's The Wealth of Nations 1776; the economist Alfred Marshall (1842-1924) established the orthodox position of neoclassical economics, which, as modified by John Maynard Keynes, remains the standard today. Major economic thinkers include David Ricardo, Thomas Malthus, J S Mill, Karl Marx, Vilfredo Pareto, and Milton Friedman.