STAVROPOL STATE MEDICAL ACADEMY
Home History, Economy, Management
And Marketing Department
L.A. Limanskaya, L.E. Toporischeva, S.V. Znamenskaya
ECONOMICS FOR MEDICAL STUDENTS
Textbook for students of General Medicine
And Dentistry in the English-speaking Medium
Федеральное Агентство по здравоохранению и социальному развитию
Ставропольская государственная медицинская академия
Кафедра Отечественной истории, экономики, менеджмента и маркетинга
The Federal Agency in Health Protection and Social Development
The Stavropol State Medical Academy
Home History, Economy, Management and Marketing Department
Л.А. Лиманская, Л.Е. Топорищева, С.В. Знаменская
L.A. Limanskaya, L.E. Toporischeva, S.V. Znamenskaya
Учебное пособие для студентов лечебного и
стоматологического факультетов англоязычного отделения
Textbook for students of General Medicine and Dentistry
In the English-speaking Medium
Экономика для студентов-медиков. Учебное пособие для студентов лечебного и стоматологического факультетов англоязычного отделения (на английском языке) Ставрополь: Изд-во СтГМА. – 2006. – 135 с.
^ Textbook for students of General Medicine and Dentistry in the English-speaking Medium. – Stavropol: StGMA. – 2006. –135 p.
Учебное пособие включает в себя краткое содержание основных тем курса «Экономика» для студентов неэкономического вуза. Оно включает задания для экономического тренинга и материалы, учитывающие медицинский образовательный профиль.
The textbook includes a short content of the basic topics of the course «Economics» for the students of noneconomic educational institutions. It consists of tasks for economy training and materials concerning medical students. The textbook is for students of General Medicine and Dentistry of the English-speaking Medium.
Лиманская Любовь Алексеевна,
кандидат экономических наук, доцент, зав. кафедрой Отечественной истории, экономики, менеджмента и маркетинга Ставропольской государственной медицинской академии.
Топорищева Лариса Егоровна,
доцент кафедры иностранных языков института им. В.Д.Чурсина.
Знаменская Стояна Васильевна,
кандидат педагогических наук, доцент кафедры иностранных языков с курсом латинского языка Ставропольской государственной медицинской академии.
Кусакина Ольга Николаевна,
доктор экономических наук, профессор, зав. кафедрой экономической теории и прикладной экономики Ставропольского государственного аграрного университета.
Шибкова Оксана Сергеевна,
кандидат психологических наук, доцент, зав. кафедрой иностранных языков естественнонаучных и экономических специальностей Ставропольского государственного университета.
Рекомендовано к изданию Цикловой методической комиссией Ставропольской государственной медицинской академии по англоязычному обучению иностранных студентов.
ISBN 5-89822-086-0 © Ставропольская государственная медицинская академия, 2006
Text 1. Economics
Economics is a social science studying economy. Like the natural sciences and other social sciences, economics attempts to find laws or principles.
Economics tries to find laws or principles by building models. The predictions of the models form the basis of economic theories. Then the predictions of the models are compared with the facts of the real world.
Economics as a science consists of two disciplines that are of microeconomics and macroeconomics.
Microeconomics is the branch of economics that studies individual producers, consumers, or markets. Microeconomics also studies how government activities such as regulations and taxes affect individual markets. Besides microeconomics, tries to understand what factors affect the prices, wages and earnings.
Macroeconomics is the branch of economics that studies the economy as a whole. It tries to understand the picture as whole rather than small parts of it. In particular, it studies the overall values of output, of unemployment and of inflation.
Tasks for Students
1. Read the text and write its annotation.
2. Say what microeconomics means.
3. Say about macroeconomics.
4. Re-tell the text.
Text 2. What is Economics?
Similarly, a notable economist of the last century Alfred Marshall called economics «a study of mankind in the ordinary business of life». Another notable Lionel Robbins, in the 1930s, described economics as «the science of choice among scarce means to accomplish unlimited ends». (This «definition» has considerable currency still, though no one seems to know just what choices, if any, it might exclude from consideration!)
During much of modern history, especially in the nineteenth century, economics was called simply «the science of wealth». Less seriously, George Bernard Shaw was credited in the early 1900s with the witticism that «economics is the science whose practitioners, even if all were laid end to end, would not reach agreement».
We may make better progress by comparing economics with other subjects. Like every other discipline that attempts to explain observed facts (e.g., physics, astronomy, meteorology), economics comprises a vast collection of descriptive material organized around a central core of theoretical principles. The manner in which theoretical principles are formulated and used in applications varies greatly from one science to another. Like psychology, economics draws much of its theoretical core from intuition, casual observation, and «common knowledge about human nature. Like astronomy, economics is largely nonexperimental. Like meteorology (also largely nonexperimental), economics is relatively inexact, as is weather forecasting. Like particle physics and molecular biology, economics deals with an extraordinary array of closely interrelated phenomena (as do sociology and social psychology). Like such disciplines as art, fantasy writing, mathematics, metaphysics, cosmology, and the like, economics attracts different people for different reasons: «One person's meat is another person's poison». Though all disciplines differ, all are remarkably similar in one respect: all are meant to convey an interesting, persuasive (possibly entertaining), and intellectually satisfying story about selected aspects of experience. As Einstein once put it: «Science [one might add art] is the attempt to make the chaotic diversity of our sense-experience correspond to a logically uniform system of thought».
The scope of economics is indicated by the facts with which it deals. These consist mainly of data on output, income, employment, expenditure, interest rates, prices and related magnitudes associated with individual activities of production, consumption, transportation, and trade. Economics deals directly with only a tiny fraction of the whole spectrum of human behavior, and so the range of problems considered by economists is relatively narrow. Contrary to popular opinion, economics does not normally include such things as personal finance, ways to start a small business, etc.; in relation to everyday life, the economist is more like an astronomer than a weather forecaster, more like a physical chemist than a pharmacist, more like a professor of hydrodynamics than a plumber is.
In principle, of course, almost any conceivable problem, from marriage, suicide, capital punishment, and religious observance to tooth brushing, drug abuse, extramarital affairs, and mall shopping, might serve (and, in the case of each of these examples has served) as an object for some economist's attention. There is, after all, no clear division between "economic" and "noneconomic" phenomena. In practice, however, economists have generally found it expedient to leave the physical and life sciences to those groups that first claimed them, though not always. In recent years, economists have invaded territory once claimed exclusively by political scientists and sociologists, not to mention territories claimed by physical anthropologists, experimental psychologists, and paleontologists.
Economics as a Social Science
Normative and positive statements
It may be useful to begin this section on the scientific approach by distinguishing between positive and normative statements. An understanding of the difference between these two types of statement will help us to appreciate the scope and limitations of economics.
Positive statements are those, which deal only with facts. 'Britain is an island', 'British Coal employs x thousand workers', 'Jane Smith obtained a grade A in Economies', are all positive statements. If a disagreement arises, over a positive statement it can be settled by looking to the facts and seeing whether they support the statement. Positive statements must be either true or false, where the word "true" is taken to mean "consistent with the facts".
Normative statements usually include or imply the words "ought" or "should". They reflect people’s moral attitudes and are expressions of what some individual or groupthinks ought to be dome. "Britain should leave the Common Market", "We ought to give more aid to underdeveloped countries", "Income should be distributed more equally", are all normative statements. These statements are based on value judgments and express views of what is "good" or "bad", "right" and "wrong". Unlike positive statements, normative statements cannot be verified by looking at the facts. Disagreements about such statements are usually settled by voting on them.
Scientific enquiry, as the term is generally understood, is confined to positive questions. It deals with those questions, which can be verified or falsified by actual observations of the real world (i.e. by checking the facts).
One major objective of science is to develop theories. These are general statements or unifying principles, which describe and explain the relationships between things we observe in the world around us. Theories are developed in an attempt to answer the question "Why? " Tides rise and fall at regular intervals of time, a city is afflicted by smog at certain times of the year, the price of strawberries falls sharply during the summer months. When some definite regular pattern is observed in the relationships between two or more things, and someone asks why this should be so, the search for a theory has begun.
In trying to produce an explanation of observed phenomena, scientific enquiry makes use of procedures, which are common to all sciences. These procedures are called scientific method.
Is Economics a Science?
Economic analysis is based upon the procedures described above, and, to the extent that the economist makes use of scientific method, economics may be described as a science. The subject matter of economics, however, is human behavior and this is much more difficult to predict than the reactions of inanimate matter. Economists, like other social scientists, cannot achieve the precision of the natural scientists and they are denied the use of many of their techniques. Many people argue that these differences are so fundamental that economics cannot be regarded as a 'true' science. Others would say that the differences are not fundamental but merely differences in the degree of accuracy attainable.
The most obvious limitation experienced by the social scientist is that he cannot test his hypotheses by laboratory experiment. His laboratory is human society; he cannot put a group of human beings into a controlled situation and then see what happens. The predictions of economic theory must be tested against developments in the real world. Economic activities must be observed and recorded and the mass of resulting data subjected to statistical analysis. Modern statistical techniques help the economist determine the probability that certain events had certain causes. He can assess from recorded data, for example, the probability that some given increase in consumption was caused by an increase in income.
The fact that "all people are different" is not such a handicap to the social scientist as might appear at first sight. The economist is interested in group behavior. He is concerned with the total demand for butter rather than the amount purchased by any one individual. While the behavior of any one person may be unpredictable, this is not necessarily true of the large group. When Arsenal score goals at High bury we can predict with a high degree of certainty that there will be a roar from the crowd, although we cannot forecast how, this or that individual will react. The economist is able to make generalizations about economic group (consumers, workers, shareholders) which are quite dependable guides to their expected behavior.
Another problem facing economists is the complexity of the world they are studying – so many things are changing simultaneously. Natural scientists in their laboratories can 'hold other things constant' while they study the effects that changes in X have on Y. Economists cannot do this. They cannot vary the quantity of money in the economy, hold everything else constant, and then see what happens. What they have to do is to assume that other things remain constant. Many propositions in economics begin with the phrase "If other things remain equal" (or the Latin equivalent ceteris paribus).
From the vast array of facts observed, economists (and other scientists) must isolate those things, which are important and study them in isolation. They have to abstract from reality in order to build a simplified model of a small part of the real world, which will help them to see how things are related one to another. In fact, the influences surrounding real-life situations are so many and so varied that we cannot consider all. All that economists can do is to try to get close to the real world by extending their model to include more and more "other influences" – but no one can construct or understand a model, which includes everything.
What we are saying is that economic theories as such do not describe the real world as we see it. They attempt to show, one by one, the forces that operate within that real world. We proceed gradually from very simple models of economic reality to more and more sophisticated ones, introducing at each stage more and more of the facts, which we can observe and experience.
Why Economists Disagree
It is often said that economics cannot be a science because no two economists agree on any economic problem. This is an exaggeration, but it is certainly true that economists disagree. Disputes among economists often arise from problems of definition and from the inadequacy of statistical data. For example, the statement "The unemployment rate in the USA is much higher than that in the UK" may be based upon the official figures issued by the authorities in these countries, but that does not mean that the statement cannot be disputed.
The numbers unemployed may refer to those people who actually register themselves as available for work, or it may represent all those who would take a job if one became available. This latter group would include a large number of people (e.g. married women) who do not normally register themselves as unemployed. In fact, the figures for the UK and the USA are collected on these very different bases so that official unemployment rates are not strictly comparable and the real differences between them may be disputed.
Although statistical information on economic affairs is now available largely than ever before, there are still many deficiencies. Such information often takes a long time to become available in processed form, and often it is too late to be used in current analysis. It may often be presented in a form, which is not very convenient for analysis, as the example above demonstrates. These deficiencies therefore leave room for disagreement among economists.
Economics is a very young science, and although economic analysis has made great strides in recent years, there is still a great deal about the workings of the economic system, which is imperfectly understood. There are many implications of existing theories, which have not yet been tested, either because insufficient time has elapsed to provide adequate data, or because no one has found a satisfactory way of testing them. Technical and economic changes also bring about changes in economic behavior so that assumptions about human behavior, which served as useful bases for predictions at one period, may become increasingly unreliable as the social and economic environment changes. Economists, then, will be in dispute over the adequacy of certain existing theories – but it is these very disputes, which lead to improvements in existing theories and the development of new ones.
The main area of disagreement among economists is on matters of economic policy. This is exactly what one would expect because policy statements are normative statements. They are value judgments. The determination of policies lies in the province of politics; it is the politician's function to decide policy matters. The economist’s role in policymaking is to act as an adviser, using specialist knowledge to provide policy makers with an analysis of the likely economic effects of the policy proposals. The economist, as such, has no more right to decide policies than the lorry driver, the shop assistant, or the artist. We must recognize, however, that economists, like everyone else, will have their own personal viewpoints on what is "best" and we must, therefore, expect them to disagree on policy questions such as the desirability of Britain's membership of the Common Market, or the likely effectiveness of an incomes policy. What we have to recognize, however, is that when economists pronounce on the desirability of any economic policy they have moved out of the field of economic analysis they are making a value judgment.
Tasks for Independent Work
1. Read the text.
2. Give a shot summery of the text.
3. Answer the questions:
a) Is Economics a science?
b) What does Economics study?
c) What is the subject of Economics?
d) What sciences are related to Economics?
e) What are the methods of Economics?
f) What does normative statement mean?
i) What does positive statement mean?
j) According to the text, can such problems marriage and extramarital affairs be the subject of economists' attention? Is there a division between "economic" and "noneconomic" problems?
Adam Smith was a great scientist who made extraordinary contributions in economics. He was born in 1723 in Kirkcaldy, a small fishing town near Edinburgh, Scotland. His father was a customs officer. He died before his son was born.
At the age of 28, Adam Smith became a Professor of Logics at the University of Glasgow. It was his first academic appointment. Some time later, he became a tutor to a wealthy Scottish duke. Then he received a grant of £300 a year. It was a very big sum, 10 times the average income at that time.
With the financial security of his grant, Smith devoted 10 years to writing his work, which founded economic science. Its full title was An Inquiry into the Nature and Causes of the Wealth of Nations. It was published with great success in 1776.
Adam Smith made economics a science. This Scottish economist is often regarded as the founder of political economy too.