APPLIED ECONOMICS

Economics as Applied
Science

ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED SCIENCE

Objectives
At the end of the lesson, the learner is expected
to:
 define basic terms in applied economics
 differentiate economics as social science and
applied science

ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

What is Applied Science?

• Applied science is a discipline of science that applies
existing scientific knowledge to develop more practical
applications, like technology or inventions.
• Within natural science, disciplines that are basic
science, also called pure science, develop information to
predict and perhaps explain—thus somehow
understand—phenomena in the natural world. Applied
science applies science to real world practice.

ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Economics as an Applied Science

• As social science, economics deals with the analysis on how
members of a society interact with one another on the creation
and utilization of wealth. Thus, economics is a science of
choosing from alternative options that will yield the highest
benefits to society in the context of competing uses and
opportunity costs.
• However, the study of economics has been perceived as too
theoretical since it deals with the principles, laws and
assumptions governing human behavior in the allocation
process.

ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Economics as an Applied Science

• As social science, economics deals with the analysis on how
members of a society interact with one another on the creation
and utilization of wealth. Thus, economics is a science of
choosing from alternative options that will yield the highest
benefits to society in the context of competing uses and
opportunity costs.
• However, the study of economics has been perceived as too
theoretical since it deals with the principles, laws and
assumptions governing human behavior in the allocation
process.

ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Applied Economics
• Applied Economics is the application of economic
theory and econometrics in specific settings. As one
of the two sets of fields of economics (the other set
being the core), it is typically characterized by the
application of the core, i.e. economic theory and
econometrics. The process often involves a
reduction in the level of abstraction of this core
theory

ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Keynes’ Discussion
• He discussed the uses of the phrases applied political economy and applied
economics noting three different uses:
1. in the sense suggested in the text [in association with the art of
political economy];
2. to designate the application of economic theory to the interpretation
and explanation of particular economic phenomena, without any
necessary reference however, to the solution of practical questions;
3. to mark off the more concrete and specialized portions of economic
doctrine from those more abstract doctrines that are held to pervade
all economic reasoning. (1917, 58–59) and applying theories of
economy on what we have in reality to get a healthy enterprise and
business prosperity.
ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Problem and Application:

Suppose that there is a sudden new trend for high
school students all over the Philippines to ride
bicycles more. How would the price system decide
“who should get what is produced?” How would
the inputs used in bicycle production be affected?

ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Activity: Economics as Science

Applied
Economics
Economics

ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Quiz: Essay
How does Applied Economics affect the daily
lives of the Filipinos?

ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Reference:
• Tullao Jr., Tereso S. Applied Economics For A
Progressive Philippines. Phoenix Publishing House;
927 Quezon Ave., Quezon City. 2016
• Pagoso, Cristobal M. Philippine Economics (Macro
Approach). NELSON PUBLICATION; Marimar
Village Paranaque City. 2003
• Carnaje, Gideon P. Applied Economics. Vibal Group
Inc, Araneta Avenue, Quezon City. 2016

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