Chapter 2: Vanity economics: a survey and an extension
Over the past half-century, the boundaries of economics have been enormously expanded. In fact, the phrase 'economics imperialism' was coined to highlight that modern economics analyses virtually all social science subjects such as crime, politics, discrimination, social norms and, in particular, family. Certain questions arise. What is the definition of economics? How does economics differ from other social sciences, say sociology, regarding research on family issues? Economics distinguishes itself from other social sciences in its fundamental assumption of individual rationality. While other social sciences do not exclude this assumption in their methods, it is the cornerstone assumption in economics. Indeed, for at least the past half-century, mathematical methods have often been used to derive theoretical results in economics. Rigorous mathematics clearly matches the assumption of individual rationality perfectly. At this point, one may ask why the discipline of economics is based more firmly on the assumption of individual rationality than other disciplines such as sociology. There are two main interrelated answers to this question. First, in at least the early stages of economics development, the research focused on issues that were not very sensitive to people's emotions, such as the market, earnings, trade and production. Thus ideology and 'political correctness' were largely not an issue in economics. This tradition continued when economists turned to study more sensitive issues such as marriage, divorce and children. Second, 'utility theory' was developed in economics, establishing a starting framework for analysing people's behaviour. I briefly outline utility theory as follows.
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