Difference of Economics to Other Social Sciences

The term "social science" refers to one or more branches of study on human activity. Branches of social sciences include anthropology, history, political science, sociology and economics. All of the social sciences seek to understand and establish causal relationships between actions, behaviors and events in human existence. Political science, sociology, psychology and economics are social science branches that seek to anticipate, understand and explain current human activity rather than past activity.

The study of economics is based on the premise that all resources are limited not only in available quantity but also in practical utility. Resources include fertile soil, water, crop yields, fossil fuels and mineral rock. Economic activity reveals the human adaptation to the real and perceived limitations on available resources. Humans may place a high price on a resource because the good is perceived to be rare and of great value. Scarcity of resources will have an impact on communities and demographics. Other social sciences study the social, political and psychological impact that scarcity has on a community, such as an increase in divorce rates or crime due to high unemployment in an area, but do not focus study on the economic reasons for the impact.

Both economics and political science include the study of rational choice in human behavior. While rational choice presumes that all actors have full information when making a decision, the reality is that full information is available to all actors only in special circumstances. In politics, the manipulation of information and knowledge contributes to political influence. Economic theory presumes that individuals think and behave rationally when making economic decisions. Although human behavior is not this simple, economic theory uses this simplicity to establish laws and principles that generally explain shifts in economic events. For example, the law of supply and demand dictates that when supply increases, price decreases. When price decreases, demand increases, but only to a point.

The institutions studied by economics is different than other social sciences, although there is great overlap with regard to the government. Economics studies the impact of businesses, government legislation and treasuries, banks and the stock market. These institutions influence the human ability or willingness to conduct business for the purpose of obtaining wealth. Government legislation works to protect consumers from producers for better or worse. In some countries, government legislation severely restricts entrance of new businesses to the marketplace.

Economics resembles natural science more than other social science disciplines. The "understanding" of economic forces and events provided by the study of economics is based on theorems and principles, many of which have proven sustainable even as economists have been forced to develop new understandings of economic events. A Nobel Prize is also offered in economics for advancements in research. No other social science is awarded its own Nobel Prize.