CT (critical thinking) in Economics

1
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.

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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.

3
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.

4
CT in Economics

• 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

5
CT in Economics

• 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

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CT in Economics

• 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.

7
CT in Economics

• 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.
• 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

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CT in Economics

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

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CT in Economics

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

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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.

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CT in Economics

• 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.

12
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.

13
CT in Economics

• 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.

14
CT in Economics

• 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

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Ct in Economics

• Models and theories are used to reason by analogy
  in economics.
• They are expected to apply when differences do
  not matter.
• 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.