Editing Economics (section)

=== Neoclassical economics ===
{{Main|Neoclassical economics}}

At its inception as a social science, ''economics'' was defined and discussed at length as the study of production, distribution, and consumption of wealth by Jean-Baptiste Say in his ''Treatise on Political Economy or, The Production, Distribution, and Consumption of Wealth'' (1803). These three items were considered only in relation to the increase or diminution of wealth, and not in reference to their processes of execution.{{efn|"This science indicates the cases in which commerce is truly productive, where whatever is gained by one is lost by another, and where it is profitable to all; it also teaches us to appreciate its several processes, but simply in their results, at which it stops. Besides this knowledge, the merchant must also understand the processes of his art. He must be acquainted with the commodities in which he deals, their qualities and defects, the countries from which they are derived, their markets, the means of their transportation, the values to be given for them in exchange, and the method of keeping accounts. The same remark is applicable to the agriculturist, to the manufacturer, and to the practical man of business; to acquire a thorough knowledge of the causes and consequences of each phenomenon, the study of political economy is essentially necessary to them all; and to become expert in his particular pursuit, each one must add thereto a knowledge of its processes." {{harv|Say|1803|page=XVI}} }} Say's definition has survived in part up to the present, modified by substituting the word "wealth" for "goods and services" meaning that wealth may include non-material objects as well. One hundred and thirty years later, [[Lionel Robbins, Baron Robbins|Lionel Robbins]] noticed that this definition no longer sufficed,{{efn|"And when we submit the definition in question to this test, it is seen to possess deficiencies which, so far from being marginal and subsidiary, amount to nothing less than a complete failure to exhibit either the scope or the significance of the most central generalisations of all." {{harv|Robbins|2007|p=5}} }} because many economists were making theoretical and philosophical inroads in other areas of human activity. In his ''[[An Essay on the Nature and Significance of Economic Science|Essay on the Nature and Significance of Economic Science]]'', he proposed a definition of economics as a study of human behaviour, subject to and constrained by scarcity,{{efn|"The conception we have adopted may be described as analytical. It does not attempt to pick out certain kinds of behaviour, but focuses attention on a particular aspect of behaviour, the form imposed by the influence of scarcity. {{harv|Robbins|2007|p=17}} }} which forces people to choose, allocate scarce resources to competing ends, and economise (seeking the greatest welfare while avoiding the wasting of scarce resources). According to Robbins: "Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses".{{sfnp|Robbins|2007|p=16}} Robbins' definition eventually became widely accepted by mainstream economists, and found its way into current textbooks.<ref>{{cite conference |title=Defining Economics: the Long Road to Acceptance of the Robbins Definition |first1=Roger E. |last1=Backhouse |first2=Steven G. |last2=Medema |work=Lionel Robbins's essay on the Nature and Significance of Economic Science, 75th anniversary conference proceedings |date=10 December 2007 |pages=209–230 |url=http://darp.lse.ac.uk/papersdb/LionelRobbinsConferenceProveedingsVolume.pdf#page=213 |conference= |access-date=30 July 2014 |archive-date=4 March 2016 |archive-url=https://web.archive.org/web/20160304060656/http://darp.lse.ac.uk/papersdb/LionelRobbinsConferenceProveedingsVolume.pdf#page=213 |url-status=live }} also published in {{cite journal |title=Defining Economics: The Long Road to Acceptance of the Robbins Definition |journal=Economica |date=October 2009 |volume=76 |issue=Supplement 1 |pages=805–820 |jstor=40268907 |doi=10.1111/j.1468-0335.2009.00789.x|last1=Backhouse |first1=Roger E |last2=Medema |first2=Steve G |s2cid=148506444 |doi-access=free }}</ref> Although far from unanimous, most mainstream economists would accept some version of Robbins' definition, even though many have raised serious objections to the scope and method of economics, emanating from that definition.{{sfnp|Backhouse|Medema|2007|page=223|ps=: "There remained division over whether economics was defined by a method or a subject matter but both sides in that debate could increasingly accept some version of the Robbins definition."}}

A body of theory later termed "neoclassical economics" formed from about 1870 to 1910. The term "economics" was popularised by such neoclassical economists as [[Alfred Marshall]] and [[Mary Paley Marshall]] as a concise synonym for "economic science" and a substitute for the earlier "[[political economy]]".<ref name="MarshallMarshall1888" /><ref name="Jevons1879"/> This corresponded to the influence on the subject of mathematical methods used in the [[natural science]]s.<ref name="Clark">{{cite book |last=Clark |first=Barry |title=Political Economy: A Comparative Approach |url=https://books.google.com/books?id=3wpiDzS45PsC&pg=PP1 |edition=2nd |year=1998 |publisher=Praeger |isbn=978-0-275-95869-5}}</ref>

Neoclassical economics systematically integrated [[supply and demand]] as joint determinants of both price and quantity in market equilibrium, influencing the allocation of output and income distribution. It rejected the classical economics' [[labour theory of value]] in favour of a [[marginal utility]] theory of value on the demand side and a more comprehensive theory of costs on the supply side.<ref>{{cite encyclopedia |chapter=Marginalist economics |chapter-url=http://www.dictionaryofeconomics.com/article?id=pde1987_X001393 |access-date=27 October 2017 |last=Campus |first=Antonietta |date=1987 |editor-last1=Eatwell |editor-first1=John |edition=first |volume=III |pages=1–6 |doi=10.1057/9780230226203.3031 |isbn=978-0-333-78676-5 |archive-url=https://web.archive.org/web/20171027231849/http://www.dictionaryofeconomics.com/article?id=pde1987_X001393 |archive-date=27 October 2017 |dictionary=The New Palgrave Dictionary of Economics |editor-first2=Murray |editor-last2=Milgate |editor-first3=Peter |editor-last3=Newman |url-status=live}}</ref> In the 20th century, neoclassical theorists departed from an earlier idea that suggested measuring total utility for a society, opting instead for [[ordinal utility]], which posits behaviour-based relations across individuals.<ref name="Hicks" /><ref>{{cite encyclopedia |title=The New Palgrave Dictionary of Economics |publisher=Palgrave Macmillan UK |access-date=27 October 2017 |last=Black |first=R.D. Collison |date=2008 |editor-last1=Durlauf |editor-first1=Steven N. |edition=2nd |pages=577–581 |doi=10.1057/9780230226203.1781 |isbn=978-0-333-78676-5 |archive-url=https://web.archive.org/web/20171028042451/http://www.dictionaryofeconomics.com/article?id=pde2008_U000047 |archive-date=28 October 2017 |editor-first2=Lawrence E. |editor-last2=Blume |chapter-url=http://www.dictionaryofeconomics.com/article?id=pde2008_U000047 |chapter=Utility |url-status=live}}</ref>

In [[microeconomics]], neoclassical economics represents incentives and costs as playing a pervasive role in shaping [[decision making]]. An immediate example of this is the [[consumer theory]] of individual demand, which isolates how prices (as costs) and income affect quantity demanded.<ref name="Hicks"/> In [[macroeconomics]] it is reflected in an early and lasting [[neoclassical synthesis]] with Keynesian macroeconomics.<ref name="Blanchard2008"/><ref name="Hicks">{{cite journal |author-link=John Hicks |last=Hicks |first=J.R. |date=April 1937 |title=Mr. Keynes and the "Classics": A Suggested Interpretation |journal=Econometrica |volume=5 |issue=2 |pages=147–159 |jstor=1907242 |doi=10.2307/1907242 }}</ref>

Neoclassical economics is occasionally referred as ''orthodox economics'' whether by its critics or sympathisers. Modern [[mainstream economics]] builds on neoclassical economics but with many refinements that either supplement or generalise earlier analysis, such as [[econometrics]], [[game theory]], analysis of [[market failure]] and [[imperfect competition]], and the [[neoclassical model]] of [[economic growth]] for analysing long-run variables affecting [[national income]].

Neoclassical economics studies the behaviour of [[individual]]s, [[household]]s, and [[organisation]]s (called economic actors, players, or agents), when they manage or use [[Scarcity|scarce]] resources, which have alternative uses, to achieve desired ends. Agents are assumed to act rationally, have multiple desirable ends in sight, limited resources to obtain these ends, a set of stable preferences, a definite overall guiding objective, and the capability of making a choice. There exists an economic problem, subject to study by economic science, when a [[Decision theory|decision]] (choice) is made by one or more players to attain the best possible outcome.<ref>{{cite journal |first=Leigh |last=Tesfatsion |title=Agent-Based Computational Economics: Growing Economies from the Bottom Up |journal=[[Artificial Life (journal)|Artificial Life]] |date=Winter 2002 |volume=8 |issue=1 |pages=55–82 |url=https://www2.econ.iastate.edu/tesfatsi/acealife.pdf |pmid=12020421 |doi=10.1162/106454602753694765 |citeseerx=10.1.1.194.4605 |s2cid=1345062 |access-date=24 June 2020 |archive-date=26 November 2020 |archive-url=https://web.archive.org/web/20201126182912/https://www2.econ.iastate.edu/tesfatsi/acealife.pdf |url-status=live }}</ref>