the difference between economics and psychology

To tell the truth, I have never taken a single course in either economics or psychology. However, my professional interests have led me to read a fair amount in both disciplines and to talk to scholars of both persuasions. I think I have noticed a basic difference.

Economists are interested in concrete actions: behaviors. They began by studying financial exchanges, but now they will investigate practically anything, including learning, war, marriage, and civic participation, as long as it involves observable or reportable acts. In contrast, pyschologists (since the decline of behaviorism) are interested in mental states, many of which are not directly observable. You can’t see what someone’s identity or mood or capacity is, nor can you necessarily ask the person directly. Pyschologists tend to measure these mental states by asking many questions or making many observations and creating statistically reliable “constructs.” Thus they like to use scales and factor analysis. (See this apparently classic 1955 paper.) Economists are suspicious of such constructs because there is always an imperfect correlation between the construct and its directly measured components.

I don’t think you can tell the difference between the disciplines by asking what they study: pyschologists explore human behavior in markets, and modern economists investigate practically everything. Instead, the divide is between a kind of empiricism or nominalism that distrusts general constructs, versus a kind of philosophical “realism” that takes unobserved mental states seriously.

As for political science–with apologies to my many friends in that field, it isn’t a discipline at all, but rather a topic area that uses methods from economics, pychology, philosophy, and narrative history.

2 thoughts on “the difference between economics and psychology

  1. airth10

    Thank you for your explanation for ‘political science’, that it is a topic area rather than a discipline. I did think of this so-called discipline as an oxymoron, riddled with unpredicables. Nevertheless, calling it political science gives it a sort of respect and seriousness.

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