Areas of study in economics

One of the main purposes is to understand how economies work, and what are the relations between the main economic players and institutions.

Economics is usually divided into three main branches:

• Microeconomics examines the economic behaviour of individual units such as businesses and households in the face of scarcity and government interactions, as well as the economic consequences of these decisions on other actors.
• Macroeconomics examines an economy as a whole with a view to understanding the interaction between economic aggregates such as national income, employment and inflation. Note that general equilibrium theory combines concepts of a macro-economic view of the economy, but does so from the microeconomic viewpoint.
• Econometrics is the application of statistical techniques to measuring economic phenomena.

Attempts to join the microeconomics and macroeconomics branches or to refute the distinction between them have been important motivators in much of recent economic thought, especially in the late 1970s and early 1980s. Today, the consensus view is arguably that good macroeconomics has solid microeconomic foundations. In other words, its premises ought to have theoretical and evidential support in microeconomics. A few authors (for example, Kurt Dopfer and Stuart Holland) 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.^{[citation needed]} Further, modern developments in consumer psychology suggest an even greater level of disaggregation one might call 'picoeconomics' that reduces the individual consumer's behavior to the psychological components that drive that behavior.

Economics can also be divided into numerous subdisciplines including: international economics, development economics, labor economics, environmental economics, industrial organization, public finance, economic psychology, economic sociology, institutional economics and economic geography.

Another division of the subject distinguishes positive economics, which seeks to predict and explain economic phenomena, from normative economics, which orders choices and actions by some criterion; such orderings necessarily involve subjective value judgments.

There are also methodologies used by economists whose underlying theories are important.

• The most significant example may be econometrics, which applies statistical techniques to the study of economic data. Computational economics relies on mathematical methods, including econometrics.
• Another trend which is more recent, and closer to microeconomics, is to use social psychology concepts (behavioural economics) and methods (experimental economics) to understand deviations from the predictions of neoclassical economics.
• Evolutionary economics often deals with the otherwise difficult questions related to the role of 'routines' and 'capabilities' in explaining heterogeneity in firm outcomes.
• Economic history is the study of economic change, and of economic phenomena in the past.

Finance has traditionally been considered a part of economics – as its body of results emerges naturally from microeconomics – but has today effectively established itself as a separate, though closely related, discipline.

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