Applied Economics

Applied economics is not a sub discipline of economics, but it uses economic theories and principles to solve issues in other fields like labour economics, industrial organization, development economics, monetary economics, health economics, public economics and economic history. Basic assumptions of economics are applied in real life situations and they are termed as applied economics. Generally accepted theories are applied in these circumstances. Applying economic theories enable swift decisions. They act as a mechanism to take reasonable steps which could improve the situation. Each aspect of an economic condition is examined before arriving at a solution. Applying economics helps to avoid negative situations in future.

Works of eminent people on applied economic studies

Roger Backhouse and Jeff Biddle argue that the concept of applied economics has multiple meanings. The concept dates back to the writings of Say and Mill where certain principles of Political economics were applied to given circumstances. J.N. Keynes was noted as the first person to use the term applied economics. Political economy was observed as abstract, deductive science and was distinct from its applications to practice. Keynes suggested hypothetical laws of political economies to explain concrete industrial facts. He also mentioned three different uses for the term applied economic studies which included a meaning suggested in the text itself, to designate applications to solve practical questions and to distinguish the concrete doctrines from the abstract doctrines.

Leon Walras organized his works as pure, social and applied economics. Pure economics involved logic. Social economics dealt with a lot of problems that differ from applied economic studies. Applied economics dealt with ways to achieve goals and judgments about the logic of pure economics. Joseph Schumpeter highlights few issues which involve the definition of applied economics. They would be those that are typical parts of economics, those independent of economics whose knowledge serves economics, those considered as public policies, comparative economics and demography and area studies.

Benefits of applied economic studies

Some abstract elements of applied economics are reduced or tuned down to study certain issues. They may be defining variables as specific concepts, providing structure to arrive at conclusions, producing numerical estimates and using the analysis for practical phenomenon. Applied economic studies helped to increase human welfare by analysis of economic problems prevalent in the real world. Eli Devons distinguished three different ways which may be applied that includes theoretical models, common sense axioms and theoretical concepts. The Journal of applied economy, Applied Economics and American Economic Journal: Applied Economics are few journals dedicated to applied economic studies.

Questions:

• Name the people who worked on applied economics.
• What are the benefits of applied economics?