Economics for Dummies

You set out to buy a TV and discover that for the £100 TV you have your eye on, you can save £10 by driving half an hour across town. You do so because you save 10%. That's obviously a bedroom TV so you also look for a main-room TV, this time for £2000. You discover that this TV is also on sale across town - for £1990. But you decide your time is worth more than that 0.5% saving, so you don't go.
According to my book on Economics you are being irrational. Your time is either worth £10 or it isn't.

I can see the point of view, but I'd wager that most people would act in line with the above. I wouldn't call this irrational: it's rational so long as you understand what people are deciding upon. And that is happiness, a psychological measure that standard Economic theory isn't altogether good at. People are happier when they think they're getting a great deal. They will spend 10 minutes on online price comparisons to save 50p on a DVD, but won't walk 100 extra yards to a shop that's 50p cheaper for orange juice, even if that only takes 2 minutes.

The discipline's de facto get-out-clause is that, however distasteful its proposed rules, if it accurately predicts the real-world, its a good theory. So there's surely a problem for it here. People don't think of money in the strict mathematical sense that Economics would like them to.

Its time for more subtlety in modern economic theory - and a change perhaps in some of its fundamental ground-rules. This is one of the thoughts of Richard Layard, Professor Emeritus at LSE. He's at a St Paul's Institute Event on Tuesday and I'll be there to report back.

What is Social Science?

Is Social Science a science? That question has been sat in my head for many years now. Its claim lies with use of qualitative and quantitative analysis. In broader terms, it seeks an objective body of knowledge that can be taught systematically. It is a soft science. Yet the more I study it, the more I understand that good vs bad social science is not just a matter of opinion, the mood of a University tutor on the day they mark an assignment. Good social science is well-structured, comprehensive and measurable. It builds on only the best, peer-reviewed theories that have gone before, leaving eccentric ideas that don't map to reality by the wayside. That and its brave attempt to illuminate our world provide it much in common with hard science.

A related question is what disciplines Social Sciences includes. Is Economics a Social Science? The London School of Economics seems to think so, being self-titled the UK's leading school of Social Science. What about History? hmm surely it helps in understanding today's society to be aware of patterns evident from the past? Philosophy? I'd vote that in too. Which makes it all the sadder that typical 3-year degree courses, Social Sciences in name, neglect to grasp not just topics but whole genres such as these, relegating them to 'Humanities' - which isn't the same at all.