Heterodox economics What is Heterodox Economics?

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Presentation transcript:

Heterodox economics What is Heterodox Economics? Heterodox Economics is an umbrella term covering various strands of economic thought as well as a series of interdisciplinary research fields. While heterodox economics is internally highly diversified, most heterodox economists agree on certain conceptual definitions (e.g. doing economics is to study the process of social provisioning in a broad sense), theoretical foundations (e.g. the role of uncertainty in economic action or the importance of the principles of effective demand and endogenous money) and a common epistemological framework, that takes the form of pluralist engagement.

BREAKING DOWN 'Heterodox Economics' Heterodox economics provides an alternative approach to mainstream economics that may help give explanation to economic phenomenon that don't received widespread credence. In addition, heterodox economics seeks to embed social and historical factors into analysis, as well as evaluate the way in which the behavior of both individuals and societies alters the development of market equilibriums.

Mainstream Economics A term used to describe schools of economic thought considered orthodox. It is not a branch of economics as of itself, but is used to describe theories often considered part of the neoclassical economics tradition. Mainstream economics follows rational choice theory, which assumes that individuals make decisions that will maximize their own utility, and uses statistics and mathematical models to demonstrate theories and evaluate various economic developments.

Neoclassical Economics Neoclassical economics is an approach to economics that relates supply and demand to an individual's rationality and his ability to maximize utility or profit. Neoclassical economics also uses mathematical equations to study of various aspects of the economy. This approach was developed in the 19th century, based on books by William Stanley Jevons, Carl Menger and Leon Walras, and became popular in the early 20th century. BREAKING DOWN 'Neoclassical Economics' The term neoclassical economics was officially coined in 1900. Neoclassical economists believes that a consumer's number-one concern is to maximize personal satisfaction, and that everyone makes decisions based on fully informed evaluations of utility. This theory coincides with the idea of rational behavior theory, which states that people act rationally when making economic decisions.