Different Approaches to Economic Problems

In this essay – Difference between economists and non economists , I looked at the different ways that economists and non economists might approach issues. The analysis involves making various generalisations, which of course may be inaccurate for some. However, it is interesting for students of economics to consider various ‘tools’ which economists should try and use when dealing with economic questions.

Some of the issues include:

• Rationality - Economic theory assumes rationality, yet in the real world we see people often making ‘irrational decisions. Behavorial economics tries to deal with this issue.
• Opportunity Cost. Opportunity cost is one of the first things on the economics syllabus. Everybody wants tax cuts, but what is the opportunity cost of this tax cut. It is not enough to say taxes must be cut, an economist should suggest how it could be funded.
• Externalities When we examine the importance of externalities economists can start to justify many things from a Fat Tax to subsidising cycling provision.  Externalities are something that non economists tend to give much less priority to.