Areas of study

Areas of economics may be divided or classified in various ways; however, an economy is usually analyzed in either of two ways:

• Microeconomics examines the economic behavior of agents (including businesses and households) and their interactions through individual markets, given scarcity and government regulation. Within microeconomics, general equilibrium theory aggregates across all markets, including their movements and interactions toward equilibrium.
• Macroeconomics examines an economy as a whole "top down" with a view to understanding interactions between the broadest aggregates such as national income and output, employment and inflation and broad aggregates like total consumption and investment spending and their components.

Since at least the 1960s, macroeconomics has been characterized by further micro-based modeling as to rationality of players and efficient use of market information, addressing a long-standing concern about inconsistent developments of the same subject.^[1]

The vast majority of economic theory is in terms of either macro or micro economics. However, a few authors (for example, Kurt Dopfer, Stuart Holland and Markos Mamalakis) also argue that 'mesoeconomics', which considers the intermediate level of economic organization such as markets and other institutional arrangements, should be considered an additional branch of economic study. Mamalakis claims that mesoeconomics "unifies and reconciles the macro and micro approaches and is a "richer" way of studying the dynamics of economics than the two traditional models.^[2]

Recent developments closer to microeconomics include behavioral economics and experimental economics. Fields bordering on other social sciences include economic history, law and economics, public choice, and cultural economics.

Financial economics has traditionally been considered a part of economics, as its body of results emerges naturally from microeconomics. Today, however, finance has established itself as a separate, though closely related, discipline.

Economics can also be divided into numerous sub-disciplines including: development economics, economic geography,environmental economics, industrial organization, information economics, institutional economics, international economics, labor economics, and public finance.

Another division of the subject distinguishes positive economics, which seeks to predict and explain economic phenomena ("what is"), from normative economics ("what ought to be"), which orders choices and actions by some criterion; such orderings necessarily involve value judgments, including selection from criteria.

Separate from mainstream or neoclassical economics, which underlies most of the assumptions and techniques described in this entry, is heterodox economics. Heterodox economics refers to approaches or schools of economic thought that do not conform to mainstream economics, which has largely developed from neoclassical economics in the late 19th century. While mainstream economics may be defined in terms of the "rationality-individualism-equilibrium nexus", heterodox economics may be defined in terms of a "institutions-history-social structure nexus".

The JEL classification codes provide a comprehensive, detailed way of classifying and searching for economics articles by subject matter. An alternative classification of often-detailed entries by mutually-exclusive categories and subcategories is The New Palgrave: A Dictionary of Economics (1987).^[3]