Economics Is Based on Scientific Methods

Abstract

Economics is a social science that describes the factors that determine the optimal allocation of resources subject to the budget constraints of individuals in society. The discipline uses models to capture the relationships among variables for purposes of analysis and forecasting. A theory is intended to provide rational explanations for observable and/or latent, that is, non-observable, data. Theories are typically explained through the use of models. A model is a set of assumptions, and such assumptions may be based on axioms or hypotheses. Economists can and do disagree on which assumptions might be classified as axioms or which are hypotheses.