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Nature of economics

Often, the question arises as to whether economics is a science or an art. Here, we will discuss whether economics is a science or an art or both.

Economics as a science

Common features of science are:
  • It is the study of branch of truth and tells us the cause and effect relationship between variables
  • It is computable
  • It has its own methodological apparatus
  • It can be predicted accurately
Economics can be considered as a science as it has all the features of science in the following ways:
  • Economics studies the cause and effect relationship between economic phenomena
    Example: Law of demand explains the cause and effect relationship between price and demand for a commodity.
  • Economics is also capable of being measured in terms of money
  • It has its own methodology of study, i.e. deductive and inductive method
  • It also forecasts the future market condition with the help of various statistical and non-statistical tools
But, it is not a pure science like physics or chemistry as:
  • Economists do not have a uniform opinion about a particular event
  • It studies the economic behaviour of man which is unpredictable
  • It is not universally applicable i.e., it cannot be used at all times and places
  • Money, which is a dependent variable, is used to measure economics

Economics as an art

Art is the practical application of knowledge and it guides us as how to achieve an objective. Daily problems can be solved with help of general economic activities like production, distribution, etc. Many economic concepts, which are theoretical are also pragmatic. For example, elasticity of demand concept being used while imposing tax on a product or service. Law of diminishing marginal utility concept being used while deciding the price of a commodity.

Economics is both an art and a science

Since economics covers the essential conditions of both, science and art, it can be considered both, as a science as well as an art.

Economics as a positive science or a normative science

  • Positive science: Positive statement only expresses the situation. It does not pass value judgement (statements that are recommendative and suggestive). Positive science has following features:
    • It deals with real situations
    • It tells us what it is
    • It is derived from the cause and effect relation of facts
Economics is a body of systematized knowledge concerning what it is! Its objective is the establishment of uniformities. It only describes the problems and it doesn’t give any solution. It is a tool maker. Prof. Robbins, Senior, and Keys say economics should be positive in nature. Example for a positive statement is “according to the law of demand, a lower price will lead to more goods sold and vice versa”.
According to Robbins, economics should be neutral between ends. An economist should not pass value judgements on decisions of human beings.



An individual may use a limited amount of money for buying liquor or food, but it is of no concern to an economist to condemn or appreciate the decision of the individual. He only studies the facts and explains things as they are.

  • Normative science: Normative science not only studies the facts, but also makes value judgements. Normative economics has following features:
    • It tells us what should be the situation
    • It involves value judgement
    • It also takes ethics into consideration
Economics is a body of systematized knowledge concerning what ought to be. Its objective is the establishment of ideals. It is a prescriptive science as it describes the problems and also gives suggestions. It is the tool user. Prof. Marshall and Pigou say that economics should be normative in nature. For example, it gives judgement on various economic activities like what should be the level of national income, wage rate, steps to be taken to solve various economic problems etc. Thus,we can conclude that economics is both, a positive and a normative science. While framing theories, it is a pure and positive science, but when practically applied, it is normative in nature. While framing theories, it is a pure and positive science, but when practically applied, it is normative in nature.


For example:
Ram: My cotton harvest this year is poor
Krishan: don’t worry. Price increases will compensate for the fall in quantity supplied.
Vinod: Climate affects crop yields. Some years are bad and others are good.
Madhur: The government should guarantee that our income will not fall. It should assure some minimum price.

If you observe the above conversation, Ram, Krishan, and Vinod are making general statements, but Madhur, is giving a solution for the problem, Hence making a Normative Statement.

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