What is economics?

One of the things I told myself I would do once tenure came through was to take some time for reflection and reading. I just finished an excellent set of essays by one of my professors from my PhD program, Pete Boettke. His book is called, The Struggle for a Better World. Pete was an energetic and passionate lecturer and has an incredible breadth of knowledge about history, philosophy, and economics. His blog is here. 

One of the essays included in his collection is called, Don't Be a "Jibbering Idiot": Economic Principles and the Properly Trained Economist. How can you not want to read an essay that includes the phrase "jibbering idiot" in the title? It has to be good, right? Well, it is. Below is an excerpt from the article in which Boettke defines economics from the George Mason University perspective.

Economics properly done is an invitation to inquiry, and the principles constitute a golden key that unlocks the deepest mysteries of the human experience. We live in a world of scarcity, and as a result, individuals must choose. In choosing, individuals face trade­offs, and in negotiating those trade­offs, they need aids to the human mind to guide them. Prices serve this guiding role, profits lure them, losses discipline them, and all of that is made possible due to an institutional environment of property, contract, and consent. These are the basic principles from which we work in economics. Economic analysis relies neither on any notion of hyper rational actors myopically concerned with maximizing monetary rewards, nor on postulating perfectly competitive markets. It relies simply on the notion that fallible yet capable human beings are striving to better their situations, and in so doing, they enter into exchange relations with others. Atomistic individualism and mechanistic notions of the market are, as Buchanan has stressed, nonsensical social science. Instead, economics as a social science is about exchange relations and the institutions within which those relationships are formed and carried out.

I love that he called economics an "invitation to inquiry", which is what drew me to the field. What I learned at Mason, with Boettke and others, was the rest of the paragraph. That economics is about individuals making decisions under scarcity within an institutional framework. GMU economists are not shy about making institutional comparisons and declaring which is better (spoiler alert: free markets are almost always better, but need to an institutional context of private property and enforceable contract).  I'm hoping to return to my economic roots a bit more now that I have the freedom to do so.