Please enable JavaScript.
Coggle requires JavaScript to display documents.
Chapter 1 Industrial capitalism, markets and economics, Social economic…
Chapter 1 Industrial capitalism, markets and economics
Economic modelling
Simplified version of reality. Established key relationship between certain key features by 'abstracting out' complicated details.
-
-
Social economic theory
Economic theories
Neoclassical economics
People's welfare is measured by the satisfaction of their preferences-if people gain more of what they want then the economy is providing a higher level of welfare
-
Individuals are self-interested and materialistic: they consider only themselves and prefer higher to lower incomes. Individuals have given goals that do not depend on what happens in the economy. Does not explore where people's motivations come from
Begins from clearly specified model of how individuals behave, drawn from assumptions about how individuals decide to do what they do
Behavioural economics
Do not assume that individuals always successfully pursue what is best for themselves-people preferences are shaped by social comparison (increase in wealth only makes individuals happy if they increase more than those they compare to).
-
-
does not start with individuals but with individuals as a whole or particular groups or institutions within it. Economy not separate from society but economic processes are embedded in society.