History of Economic Thought

1. History of Economic Thought Introduction Introduction

2. Introduction • Economics Today • Terminology • Why Study History of Economic Thought? Introduction

3. Economics Today– Terminology – Why Study History of Economic Thought? “Traditional” Topics of Economics • Economic growth • Business cycles • Government policy (taxes, budget, debt) • Monetary policy (inflation, interest rates) • Financial Economics (stock market) • International economics (trade, exchange rates) Introduction

4. Economics Today– Terminology – Why Study History of Economic Thought? Other Areas of Economics Introduction

5. Economics Today– Terminology – Why Study History of Economic Thought? Other Areas of Economics • Llussá, F. and Tavares, J., 2011. The economics of terrorism: a (simple) taxonomy of the literature. Defence and Peace Economics, 22(2), pp.105-123. Introduction

6. Economics Today– Terminology – Why Study History of Economic Thought? Other Areas of Economics • Journal of Sports Economics Introduction

7. Economics Today– Terminology – Why Study History of Economic Thought? Other Areas of Economics • Webber, Douglas A. Are college costs worth it? How ability, major, and debt affect the returns to schooling.Economics of Education Review 53 (2016): 296-310. Introduction

8. Economics Today– Terminology – Why Study History of Economic Thought? Other Areas of Economics • Crime, Racial Discrimination • Fryer Jr, Roland G. An Empirical Analysis of Racial Differences in Police Use of Force. No. w22399. National Bureau of Economic Research, 2016. • ECON 515 - Economics of Crime and Justice Introduction

9. Economics Today– Terminology – Why Study History of Economic Thought? Other Areas of Economics • Family, marriage, divorce • Greenwood, Jeremy, and Nezih Guner. Marriage and divorce since World War II: analyzing the role of technological progress on the formation of households. NBER Macroeconomics Annual 23, no. 1 (2008): 231-276. • Basic idea: labor-saving technology makes it easier for singles to maintain their own home. Introduction

10. Economics Today– Terminology – Why Study History of Economic Thought? Other Areas of Economics • Abortion • Donohue, John J., and Steven D. Levitt. The impact of legalized abortion on crime The Quarterly Journal of Economics 116, no. 2 (2001): 379-420. • Basic idea: (i) Legalized abortion leads to fewer "unwanted" babies being born, and (ii) Unwanted babies are more likely to suffer abuse and neglect and are therefore have higher risk for criminal involvement later in life. Introduction

11. Economics Today– Terminology – Why Study History of Economic Thought? What is Economics? • Addiction • Becker, G.S. and Murphy, K.M., 1988. A theory of rational addiction. Journal of political Economy, 96(4), pp.675-700. Introduction

12. Economics Today– Terminology – Why Study History of Economic Thought? What is Economics? • Suicide • Hamermesh, D.S. and Soss, N.M., 1974. An economic theory of suicide. Journal of Political Economy, 82(1), pp.83-98. Introduction

13. Economics Today– Terminology – Why Study History of Economic Thought? Other Areas of Economics • Environmental Economics • ECON 550 - Environmental Economics Introduction

14. What is Economics? Economics Today– Terminology – Why Study History of Economic Thought? Introduction

15. Economics Today – Terminology – Why Study History of Economic Thought? The Central Focus of Modern Economic Thought • Scarcity – wants exceed available resources. • Mechanisms to allocate scarce resources • Brute force • Tradition • Central planning (government, church) • Markets • Modern economics is focusing primarily on how markets operate Introduction

16. Economics Today – Terminology – Why Study History of Economic Thought? The Central Focus of Modern Economic Thought • Definition of Economics – a social science that studies how people (individuals, firms and societies) make decisions about scarce resources. Introduction

17. Economics Today – Terminology – Why Study History of Economic Thought? Divisions of Modern Economic Theory • Microeconomics – questions of allocation and distribution • Allocation – what to produce and how to produce • Distribution – how real income is divided among the members of society • Main tool – demand and supply • Macroeconomics – questions of stability and growth Introduction

18. Economics Today – Terminology – Why Study History of Economic Thought? Orthodox and Heterodox Economists • Orthodox – mainstream or “legitimate” approach; included in graduate schools programs • Heterodox – considered by mainstream economists as “illegitimate” approach • The distinction is not “black and white”, and often what was heterodox in the past, became orthodox later Introduction

19. Economics Today – Terminology – Why Study History of Economic Thought? Economics as an Art and as a Science • Positive Economics – concerns with understanding the forces that govern economic activity: How does the economy work? What are the forces that determine the distribution of income? • Normative Economics – concerns with questions of what should be. Integration of economics and ethics. • The art of economics – questions of policy, relating the science of positive economics to achieve normative goals. Introduction

20. Economics Today – Terminology – Why Study History of Economic Thought? Which are positive and which are normative statements? • Human activity caused the recent global warming. • We should do something about the global warming. • The wall on the Mexican border costs 15 billion dollars. • We should build a wall on the Mexican border. Introduction

21. Economics Today – Terminology – Why Study History of Economic Thought? Key Normative Questions • How much freedom should we have? • What kind of government should we have? • When and how should the government intervene in our lives? • What kind of laws should we have? These are the questions that thinkers debated the since early civilization. Introduction

22. Economics Today – Terminology – Why Study History of Economic Thought? Methodological Issues – How Should we Study Economics? • Inductive reasoning – empirical, theory based on observation (e.g. Adam Smith). • Deductive reasoning – based on logic, applies general ideas to particular instances (e.g. David Ricardo). • Abductive reasoning – a mix of the above (e.g. John Stuart Mill, most modern economists) Introduction

23. Economics Today – Terminology – Why Study History of Economic Thought? Why Study History of Economic Thought? • Becoming better economists • Learning previous methodologies and ideas • Improving logical deduction • Humility - learning from mistakes • Develop critical thinking Introduction

24. Economics Today – Terminology – Why Study History of Economic Thought? Why Study History of Economic Thought? • Studying old ideas to be inspired and create new ideas • Summarizing the material learned in previous courses, filling gaps in understanding of principles of economics • Grasping the enormous scope of Economics Introduction