Michael Mandel says no.

  • Proposed definition: Economics is the study of the functioning–and malfunctioning–of the economy, with the aim of improving living standards
  • My justification for a different definition is that there are big chunks of the economy where scarcity is not important, in any but a formal sense. If anything we seem to have an abundance of food and manufactured goods, and the cost of moving and manipulating information has fallen very very sharply. I’d also like to get in the sense that economics has a purpose.

    ‘PGL’ is not amused.

    I just lost it when I read this and here was my reply:

  • I keep saying that the foundation of economics is the Law of Scarcity and now Mandel says forgot all of that.
  • I am two-handed on this issue. On the one hand, just because food, say, has become more abundant does not mean that we can ignore scarcity. At any moment in time, for a given state of know-how, the conventional definition of economics as dealing with the allocation of scarce resources among competing ends applies.

    On the other hand, some of the most interesting economic observations concern relative abundance. Look at our standard of living compared to 100 years ago. Look at South Korea compared with North Korea. Robert Lucas famously said that “The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them it is hard to think of anything else.”

    The standard economics textbook does not treat the issues of “relative abundance” very well. I think that there is a market opportunity for a book that can fix that.