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Applied Economics

The meaning and origin of applied economics is rooted in the views of two economists, Mill and Say. Say’s view explained the application of political economy principles to solve any economic circumstances. Mill’s perspective which was expressed through his work integrated principles of political economy and those of social philosophy to solve economic situations.

Mill and Say's views were reinforced by the perspectives of John Neville Keynes. Keynes was the first economist to use the term "applied economics." He advocated for abstract reasoning that leads to the formation of a body of theory which does not rely on a myriad of economic facts. Further, Keynes formed a clear distinction between "applied economics" and “art of political economy” through three differentiating uses;

  1. To create a difference between the abstract doctrines from the specialized and concrete traditions that hold economic reasoning. More so to apply economic theories to the resolution of economic problems to achieve prosperity.
  2. To differentiate the two phrases and apply them appropriately.
  3. To easily interpret economic phenomena by use of economic theories without directly referencing various economic facts.

Modern View

Modern economics explain that there is the abstract economic theory which forms the core of the economics discipline, and then there is the applied economics. Applied economics in the modern view comprises of lowering level of abstraction which includes;

  • Provision of numerical estimates for economic parameters
  • Creating more specific concepts by using revised variables
  • Interpretation of real life economic phenomena by use of analysis.
  • Drawing of detailed conclusions through a well laid down structure.