Thursday, October 20, 2011

Macroeconomics, Microeconomics, shittily or aptly named?

I posted this in TGGP's comments a few seconds ago:

I may have a shitty understanding of macroeconomics because to me “macro” means big, so I think it means economic study on the largest order of scale (global economics, or the largest salient subdivisions of global economics). So that studying the effect of policy on the economic wellbeing of the USA would be macroeconomics. In that sense, I see its hard to deny that Marx was a macroeconomic historian.

“Micro” means small, so I think of microeconomics as the study of economics on the smallest scale, and perhaps slightly larger scales that don’t approach the salient features of macroeconomics. So that an experiment of how 100 people behave in a market with certain starting conditions and regulations would be a microeconomic experiment.

Perhaps my understanding of macroeconomics and microeconomics is way off -but then I think that would be an indication that the nomenclature is shitty.

EDIT: I checked wikipedia on macro and microeconomics. Macro seems to be what I thought above in this post. Micro and applied micro seems to touch some very macrosocial phenomena:

Study of the health care sector of the American economy? That's so large as to be a macrosocial phenomenon, for example.

I'm guessing its called micro if it looks at how something affects individual (consumer, worker, hirer, taxpayer) choices, even if its looking at it in large, macrosocial aggregrations.

1 comment:

  1. I think the most underappreciated cause of the ongoing global financial crisis is the belief in standard macroeconomics that debt levels are self-regulating (the argument being that rational economic agents only take on as much debt as they can repay). It seems that debt levels should have been up there with unemployment and inflation as macroeconomic indicators to be tracked by the technocrats.

    I picked up this idea from the economist Steven Keen, who cites financial economist Hyman Minsky as the road not traveled. Nouriel Roubini also talked about Minsky.