CT (critical thinking) in Economics When economists reason, they make arguments, they deduce from hypotheses, they create models, and they offer explanations. We have developed general ideas of critical thinking but we must evaluate the specific reasoning used by economists. We must evaluate whether we should be convinced that a claim is true or some argument is good as well as how to formulate good arguments. When economists reason, they make arguments, they deduce from hypotheses, they create models, and they offer explanations. We have developed general ideas of critical thinking but we must evaluate the specific reasoning used by economists. We must evaluate whether we should be convinced that a claim is true or some argument is good as well as how to formulate good arguments.

CT in Economics Critical thinking is more than knowing definitions and rules for reasoning, it requires judgment developed through practice. We will practice critical thinking in this course but it should become and integral part of your education and your life. Critical thinking is more than knowing definitions and rules for reasoning, it requires judgment developed through practice. We will practice critical thinking in this course but it should become and integral part of your education and your life.

CT in Economics What are you arguing about? Is it a claim that is true or false or just nonsense? Is the claim relative to egocentrism or is the truth independent of people? These are questions that must be answered before any analysis of reasoning? Do we know the terms (definitions) and what they mean? What is a good definitions? What type of standards are being invoked (subjective or objective)? We are trying to arrive at truth from our reasoning. What are you arguing about? Is it a claim that is true or false or just nonsense? Is the claim relative to egocentrism or is the truth independent of people? These are questions that must be answered before any analysis of reasoning? Do we know the terms (definitions) and what they mean? What is a good definitions? What type of standards are being invoked (subjective or objective)? We are trying to arrive at truth from our reasoning.

CT in Economics What is a claim? What is a claim? –A claim is a statement that is either true or false but not both? –Example: I think poverty is a severe problem in the United States. The United States has one of the highest infant mortality rates in the developed world. –A claim is a conclusion

CT in Economics Subjective claim Subjective claim –This is type of claim where what someone or a group believes determines if it is true or false. –Example: I think poverty is a severe problem in the United States. –In economics we call subjective claims normative statements because they are based on someone opinion about a problem or issue

CT in Economics Objective claim Objective claim –Are those based on some impersonal standard –Example: The United States has one of the highest infant mortality rates in the developed world. –In economics we call objective claims, positive statements because they are based on facts, data, etc.

CT in Economics A definition is a good way to clarify our thinking. A definition is a good way to clarify our thinking. A definition is an explanation or stipulation of how to use a word or phrase. A definition is an explanation or stipulation of how to use a word or phrase. Definitions tell us what we are talking about. Definitions tell us what we are talking about. Economics is the study of how people, institutions, and society make choices under conditions of scarcity. This is a definition and not a claim Economics is the study of how people, institutions, and society make choices under conditions of scarcity. This is a definition and not a claim

CT in Economics Persuasive definition is not a definition but a claim. Persuasive definition is not a definition but a claim. Examples: Examples: –“A capitalist is someone who thinks money is more important than people”. The writer is trying to persuade the reader that this is a definition. –“Capital is the physical plants, machinery and equipment used to produce other goods”. This is a definition used by economic writers.

CT in Economics A good definition satisfies the following criteria: A good definition satisfies the following criteria: The words doing the defining are clear and better understood than the word or phrase being defined. The words doing the defining are clear and better understood than the word or phrase being defined. The words being defined and the defining phrase can be used interchangeably. Capital is machinery and machinery in capital. The words being defined and the defining phrase can be used interchangeably. Capital is machinery and machinery in capital.

CT in Economics An “argument” is an attempt to convince someone that a particular claim, called the conclusion, is true. The reasons given for believing that the conclusion is true, are the premises, which are a collection of claims. An “argument” is an attempt to convince someone that a particular claim, called the conclusion, is true. The reasons given for believing that the conclusion is true, are the premises, which are a collection of claims.

CT in Economics Arguments Arguments –An argument can be no better than the weakest reason given to support the claim or conclusion. –Example: Including Mexico in a free trade agreement with the United States and Canada will create millions of new jobs in Mexico, thus Mexico will sign the agreement. This is a bad argument because it assumes that millions of jobs will be created in Mexico and as a result Mexico will sign the agreement. This is a bad argument because it assumes that millions of jobs will be created in Mexico and as a result Mexico will sign the agreement.

CT in Economics Arguments: The premises, which are the reasons given to support the claim, also called the conclusion must support the conclusion. Another way of saying it is that the conclusion must follow from the premises. Arguments: The premises, which are the reasons given to support the claim, also called the conclusion must support the conclusion. Another way of saying it is that the conclusion must follow from the premises.

CT in Economics Common mistakes in reasoning with cause and effect. Common mistakes in reasoning with cause and effect. –Confusing cause and effect –Coincidence and not cause and effect Example: During the summer people eat more ice cream and there are more drownings. We say the eating more ice cream cause more drownings. This is false reasoning because there is coincidence, not cause and effect. There a common cause, hot weather. Example: During the summer people eat more ice cream and there are more drownings. We say the eating more ice cream cause more drownings. This is false reasoning because there is coincidence, not cause and effect. There a common cause, hot weather.

CT in Economics Reasoning with Economic models Reasoning with Economic models –Models are used to reason by analogy. We draw conclusions based on the similarities, so long as the differences do not matter. –Production Possibilities curve (Model) –Circular flow model of the economy

Ct in Economics Models and theories are used to reason by analogy in economics. Models and theories are used to reason by analogy in economics. They are expected to apply when differences do not matter. They are expected to apply when differences do not matter. “Cetris Paribus” assume all else equal. “Cetris Paribus” assume all else equal. –The economist is assuming that only a select few variables are used in the model, and so long as all else is negligible, that is differences do not matter, the conclusion will be true.