Economists organize their discipline in fields from agricultural economics to urban economics. Many economists specialize in a field by publishing original essays on topics and teaching courses in a specific field.
The fields are in two sets: Those that develop core skills and those that emphasize application of the skills in specific settings. The core itself involves two modes of analysis. The Skills page gives simple examples. First, mathematical description of economic phenomena allows derivation of relationships. This mode of thought is called economic theory. Mathematics allows arguing by deductive reasoning from stated premises to a conclusion. It offers the internal consistency of mathematical proofs but requires no evidence of applicability.
The second core method looks for evidence based on observing economic phenomena. It draws inference from persistent patterns. A consistent pattern that is distinct from the complexity and randomness in nature is likely to have meaning. This mode of thought is called inductive reasoning. It is the mode of analysis of economic historians, statisticians, and experimenters. The study of formal methods for drawing inferences from statistical evidence in economics is called econometrics.
Many advances in economic understanding come from the interaction between deduction and induction. When mathematical analysis yields new insights, the historians, statisticians, and experimenters look for ways to judge whether available evidence is consistent with the theory. When observation shows phenomena that are inconsistent with available theories, economic theorists look for new theories. The core fields are in item C on the list of fields shown below.
Most economists concentrate their work and teaching in an applied field, that is, in the other categories shown below. They study the history of the phenomena and adapt the core theoretical ideas of economics to offer explanations. They develop a variety of methods to observe and measure events and apply econometric methods to test hypotheses. For example, international economists study the history of trade, balance of payments, and exchange rates. They will understand both the economic theories and the econometric findings that explain international economic phenomena.
The fields of economics, however, have fuzzy boundaries because economic events are interconnected. Every transaction has a buyer and a seller; each economic event has extended consequences. A change in a wage rate will affect the cost of the goods the workers produce as well as change the income and consumption patterns of the workers’ households. An economist working in one field will be aware of connections to the rest of the economy.
The fields of economics, then, are more signposts than fences. They include the core areas of mathematical and statistical methods as well as the many arenas in which the core methods are applied. Most undergraduate Programs include study in the core fields and in a selection of applied fields. The standard classification of economic fields given below appears in the Journal of Economic Literature . These field labels provide enduring markers on the terrain of economic thought.