ct (critical thinking) in economics when economists reason, they make arguments, they deduce from...

CT CT (critical thinking) (critical thinking)

in Economicsin Economics When economists reason, they make When economists reason, they make

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

CT in Economics CT in Economics

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

CT in EconomicsCT in Economics

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


What is a claim?What is a claim?– A claim is a statement that is either A claim is a statement that is either

true or false but not both?true or false but not both?– Example: I think poverty is a severe Example: I think poverty is a severe

problem in the United States. The problem in the United States. The United States has one of the highest United States has one of the highest infant mortality rates in the infant mortality rates in the developed world.developed world.

– A claim is a conclusion A claim is a conclusion


Subjective claimSubjective claim– This is type of claim where what someone This is type of claim where what someone

or a group believes determines if it is true or a group believes determines if it is true or false.or false.

– Example: I think poverty is a severe Example: I think poverty is a severe problem in the United States. problem in the United States.

– In economics we call subjective claims In economics we call subjective claims normative statements because they are normative statements because they are based on someone opinion about a based on someone opinion about a problem or issueproblem or issue


Objective claimObjective claim– Are those based on some impersonal Are those based on some impersonal

standardstandard– Example: The United States has one Example: The United States has one

of the highest infant mortality rates of the highest infant mortality rates in the developed world.in the developed world.

– In economics we call objective In economics we call objective claims, positive statements because claims, positive statements because they are based on facts, data, etc.they are based on facts, data, etc.


A definition is a good way to clarify our A definition is a good way to clarify our thinking. thinking.

A definition is an explanation or A definition is an explanation or stipulation of how to use a word or stipulation of how to use a word or phrase.phrase.

Definitions tell us what we are talking Definitions tell us what we are talking about.about.

Economics is the study of how people , Economics is the study of how people , institutions, and society make choices institutions, and society make choices under conditions of scarcity. This is a under conditions of scarcity. This is a definition and not a claimdefinition and not a claim


Persuasive definition is not a definition Persuasive definition is not a definition but a claim.but a claim.

Examples:Examples:– ““A capitalist is someone who thinks money A capitalist is someone who thinks money

is more important than people”. The writer is more important than people”. The writer is trying to persuade the reader that this is is trying to persuade the reader that this is a definition.a definition.

– ““Capital is the physical plants, machinery Capital is the physical plants, machinery and equipment used to produce other and equipment used to produce other goods”. This is a definition used by goods”. This is a definition used by economic writers.economic writers.


A good definition satisfies the following A good definition satisfies the following criteria:criteria:

The words doing the defining are clear The words doing the defining are clear and better understood than the word and better understood than the word or phrase being defined.or phrase being defined.

The words being defined and the The words being defined and the defining phrase can be used defining phrase can be used interchangeably. Capital is machinery interchangeably. Capital is machinery and machinery in capital.and machinery in capital.


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


ArgumentsArguments– An argument can be no better than the An argument can be no better than the

weakest reason given to support the claim or weakest reason given to support the claim or conclusion.conclusion.

– Example: Including Mexico in a free trade Example: Including Mexico in a free trade agreement with the United States and agreement with the United States and Canada will create millions of new jobs in Canada will create millions of new jobs in Mexico, thus Mexico will sign the agreement. Mexico, thus Mexico will sign the agreement.

This is a bad argument because it assumes that This is a bad argument because it assumes that millions of jobs will be created in Mexico and as a millions of jobs will be created in Mexico and as a result Mexico will sign the agreement.result Mexico will sign the agreement.


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

CT in EconomicsCT in Economics Common mistakes in reasoning Common mistakes in reasoning

with cause and effect.with cause and effect.– Confusing cause and effectConfusing cause and effect– Coincidence and not cause and Coincidence and not cause and

effecteffect Example: During the summer people Example: During the summer people

eat more ice cream and there are more eat more ice cream and there are more drownings. We say the eating more ice drownings. We say the eating more ice cream cause more drownings. This is cream cause more drownings. This is false reasoning because there is false reasoning because there is coincidence, not cause and effect. There coincidence, not cause and effect. There a common cause, hot weather. a common cause, hot weather.


Reasoning with Economic modelsReasoning with Economic models– Models are used to reason by Models are used to reason by

analogy. We draw conclusions based analogy. We draw conclusions based on the similarities, so long as the on the similarities, so long as the differences do not matter.differences do not matter.

– Production Possibilities curve Production Possibilities curve (Model)(Model)

– Circular flow model of the economyCircular flow model of the economy

Ct in EconomicsCt in Economics Models and theories are used to Models and theories are used to

reason by analogy in economics.reason by analogy in economics. They are expected to apply when They are expected to apply when

differences do not matter.differences do not matter. ““Cetris Paribus” assume all else Cetris Paribus” assume all else

equal.equal.– The economist is assuming that only a The economist is assuming that only a

select few variables are used in the select few variables are used in the model, and so long as all else is model, and so long as all else is negligible, that is differences do not negligible, that is differences do not matter, the conclusion will be true.matter, the conclusion will be true.

ct (critical thinking) in economics when economists reason, they make arguments, they deduce from...

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