Published online by Cambridge University Press: 03 December 2009
Everyone knows that economists have always studied prices, trade, markets, and money. Not everyone knows that they are now also researching topics like marriage, fertility, religion, politics, fads, crime, and punishment. These areas might seem intrinsically non-economic, and so inaccessible to economists. They are part of the field, however, when we have a broad and complete understanding of what economics is.
Contemporary economists believe that economics is not defined by its subject matter but by its method. Economists try to understand and explain the world by assuming that the phenomena they observe are the outcomes of people's purposeful decisions. Individuals try to achieve their objectives, given their limitations — limited time, money, and energy — that is to say, they optimize. The interactions of individuals will determine aggregate social outcomes — that is, market equilibrium.
This broader approach needs a more comprehensive definition of prices, goods, and markets. Markets are places where goods are exchanged and prices for those goods are paid. For economists, goods are just things we want to obtain. They can be resources like oil, manufactures like cars, or intangibles, such as esteem of one's colleagues, peaceful relations between countries, or a quiet evening at home. Some goods cannot be “purchased” only with money.
- The New Economics of Human Behaviour , pp. 1 - 12Publisher: Cambridge University PressPrint publication year: 1995