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16 17As students of economics, we are interested in things like taxationand other sources of revenue and standard of living in the past.In economics, we make use of historical data to formulate economiclaws. We make use of history in economics to study the materialconditions of people in the past. There is a separate branch of economicsknown as “Economic History”.We may say economics is the fruit of history and history in the rootof economics:“Economics without history has no root;History without economics has no fruit”.Economics and EthicsEthics is a social science. It deals with moral questions. It discussesthe rules that govern right conduct and morality. It deals with questionsof right and wrong. It aims at promoting good life.There is connection between economics and ethics. Whileeconomics, according to Marshall, aims at promoting material welfare,ethics aims at promoting moral welfare. When we discuss economicproblems, often we consider ethical issues. The government introducedprohibition in many states for ethical reasons, though there was heavyloss of revenue to it.But Lionel Robbins strongly believes that an economist as aneconomist should not consider ethical aspects of economic problems.But many economists do not agree with him. They believe thateconomics cannot be dissociated from ethics. Even Marshall consideredeconomics as a handmaid of ethics. He looked at economics as a studyof means to better the conditions of human life.Economics and JurisprudenceJurisprudence is the science of law. The economic progress of anation depends to a great extent on its legal system. Good laws promoteeconomic progress and bad laws act as an impediment to growth. Forexample, in the past when we welcomed foreigners to invest in ourcountry, they used to say our taxation was complex and not good. Ofcourse, now things have improved. So we must have simple and clearlaws in the fields of taxation and labour legislation to promote economicprogress.Economics and psychologyPsychology is the science of mind. It deals with all kinds of humanbehaviour. For example, we have child psychology, mob psychology,industrial psychology and criminal psychology. But economics studiesone aspect of human behaviour. It studies human behaviour withreference to unlimited wants and limited means. Of late, psychologyhas become important in analyzing economic problems. To deal withlabour problems, we must understand industrial psychology. And a goodbusinessman must understand the psychology of buyers whenever hewants to change the price of his good. Many important laws of economicsare based on psychology. For example, we have the law of diminishingmarginal utility. It tells that the more and more of a thing you have, theless and less you want it.Economics, mathematics and statisticsAmong other sciences, economics is related to mathematics andstatistics. Statistics is the science of averages. It is the science of counting.Many tables and diagrams used in economics are based on statisticalanalysis. Mathematical methods are largely used in modern economics.Now we have a new science called econometrics. It makes useof statistics and mathematics in economics. The econometric societywas founded in 1930, and the first Nobel prize in economics wasawarded to Jan Tinberen and Ragnar Frisch for their contribution toeconometrics.Static and dynamic conceptsTime element is very useful in studying the working of an economy.There are two main lines of approach. They are 1. static analysis and2. dynamic analysis. In the case of static analysis, we examine a problem
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