Foundation of Social Studies (SSED-113)

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 Foundation of Social Studies (SSED-113)

PREFACE

This module is designed to establish the foundation of social studies learning among

students majoring in social studies. This contains lessons regarding the nature, meaning, and

concepts specific to the different social science disciplines. There are four essential parts in this

module namely: targets, take off, self-check, and self-reflect. Each part of the module intends to

guide its reader towards the understanding of the course. This module only covers topics under

prelims and midterms.

It is hoped that after this module is finished, students who used this module will have a

better and a more in-depth understanding of the different social science disciplines.

Intended Learning Outcomes (ILOS)

1. Demonstrate factual knowledge on the nature and theories under different disciplines
in social science.

2. Use knowledge learned from each social science to make valid arguments in defending
a truth claim.

3. Apply course materials along with techniques and procedures covered in this course to
analyze important societal issues

4. Demonstrate specific skills, competencies and thought processes sufficient to support

further study or work in this course or related fields.

5. Demonstrate reasoned argument to the solution of familiar and unfamiliar problems

relevant to the course.

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TOPIC 1: INTRODUCTION TO THE NATURE, MEANING AND PURPOSE OF

SOCIAL STUDIES

Targets

1. Explain the purpose of social studies as one of the areas in basic education
curriculum.
2. Distinguish different social science disciplines from each other and explain their
importance.
3. Share insights about the issues and challenges in social studies teaching.

Take Off

Try to recall your past experiences from your social studies classes. After recalling your
past experiences, answer the following questions:

1. How did you feel? Disappointed or motivated?

2. What did you enjoy? What did you not enjoy?
3. If you were to describe your past experiences from your social studies classes in one
word, what is it?

Content

A. Social Studies

• Social Studies is the integrated study of the social and humanities to promote civic
competence. It provides coordinated, systematic study drawing upon such disciplines as
anthropology, archaeology, economics, geography, history, law, philosophy, political science,
psychology, religion, and sociology, as well as appropriate content from the humanities,
mathematics, and natural sciences. (National Council for the Social Studies)

• The primary purpose of social studies is to help young people develop the ability to
make informed and reasoned decisions for public good as citizens of a culturally diverse,
democratic society interdependent world.

• Social Studies is the study of those data, analyses, and ethical issues that deal with
human history human behaviour and human values in relation to technology and ecology. It is
about how and why people act, they believe, and where and how they live and have lived.

• Social Studies is 'the through which the capacities of disciplinary knowledge, thinking
skills, commitment to democratic values and citizen participation are built in the students.

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B. Social Science
• Social Science is a systematized body of knowledge about human beings and society.
Social Science emphasizes the application of scientific methods and rigorous standards of
evidence to the study of the humanity and the social world the use of both qualitative and
quantitative. It is composed of the different discipline namely History, Sociology,
Anthropology, Economics, Psychology, and Political Science.

There are several principles, on which we organize social studies. These are:

• The Social Science tradition offers the findings, concepts, and rules of the different
sciences, centring on the steps of the scientific method. Organizing ideas in this approach could
be class, culture, location, power, or market system. This tradition seeks to give secondary
students a sample the ideas, skills. a data available to scientist reduced to manageable terms for
young people.

• The citizenship transmission approach basically stresses be of goals and expectations

about society; seeking to develop the ideal citizen in a democratic society. The desired product is
someone who knows and understands the culture and its values and is able to function effectively
within it. The intent is to inculcate within students those democratic beliefs and convictions that
will be supportive yet critical of social and political institutions while providing them assistance
in career decision making and personal development.

• Social Studies taught as reflective inquiry, proposes analysis and decision making as
the heart or vital element in student’s classroom life, applied to both the content and process of
knowing and valuing. Method and content are closely interrelated with a critical view toward all
conclusions, theories, and summary judgements. Problem solving and critical thinking are
integral to the reflective inquiry tradition; students are placed in a situation in which they must
deal with ambiguities and unknowns in order to make sense of the world.

Focus of Study of the Different Social Science Disciplines

Social Science Focus/Interest

Anthropology the study of the origins and varieties Culture, Family, Kinship,
of human cultures; Belief System
Economics deals with how society allocates its Markets, Resources, Supply
scarce resources among its unlimited and Demand, Opportunity
wants and needs. Cost, Productivity, Exchange
System
Geography deals with the cultural and physical Landforms, Ecology,
factors that shape economic, social, Human-Land Interactions,
political, and environmental patterns Place, People
of diverse regions and peoples.

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Political Science is concerned with power—its exercise Power, Government, Inte-rest

and restrain within the formal Groups, Nations
institutions of government.
Psychology the understanding of the mind thought Personality, Learning,
and behaviour Individual Psyche,
Motivation ,Deviance
Sociology aims to discover the basic structure of Class and Caste, Social
human society. i.e. the groups or Groups, Social Control,
classes which make up society. Ethnicity and Race
Sociology focuses on individuals,
groups and examines how people
behave and change the social
environment.

Social Studies draws its content and process from the different social science disciplines,
hence social studies is considered interdisciplinary and multidisciplinary in its approach. The
following illustration shows how the different concepts, theories, and principles of the different
disciplines contribute to understand many of the social problems being studied in social studies.

Self-Check

Before you continue with the next lesson, have a self-check first by answering these
questions:

1. What’s the difference between social science and social studies?

2. What social science is your favourite, why?

TOPIC II: UNDERSTANDING PHILOSOPHY

Targets

1. Develop own definition of philosophy.

2. Explain the different branches of philosophy based on their focus.
3. Enhance critical thinking skills.

Take Off

I’ll give you a story then try to give your conclusion on why such story ended the way it
did. So this is the story:

A professor gave final exam to his students in Philosophy, his instruction was like this:

“With all your knowledge in philosophy, describe this chair in front.”

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All students took the entire hour, writing back to back, except for one, just to describe the
chair as instructed by their professor. However, when the results of their exam were given,
everybody got shocked because only the student who took a few minutes to answer and with the
shortest answer passed the exam. You know what his answer was “Which chair?” Yes, that was
his answer.

Now, the question is this. What do you think is the reason on why that student who got
the shortest answer of “Which chair?” passed the exam and not those that had lengthy answers to
describe the chair?

Content

What is Philosophy?

At its simplest, philosophy (from the Greek or phílosophía, meaning ‘the love of
wisdom’) is the study of knowledge, or "thinking about thinking", although the breadth of what it
covers is perhaps best illustrated by a selection of other alternative definitions:

• the discipline concerned with questions of how one should live (ethics); what sorts of
things exist and what are their essential natures (metaphysics); what counts as genuine
knowledge (epistemology); and what are the correct principles of reasoning (logic)
(Wikipedia)
• investigation of the nature, causes, or principles of reality, knowledge, or values, based on
logical reasoning rather than empirical methods (American Heritage Dictionary)
• the study of the ultimate nature of existence, reality, knowledge and goodness, as
discoverable by human reasoning (Penguin English Dictionary)
• the rational investigation of questions about existence and knowledge and
ethics (WordNet)
• the search for knowledge and truth, especially about the nature of man and his behavior
and beliefs (Kernerman English Multilingual Dictionary)
• the rational and critical inquiry into basic principles (Microsoft Encarta Encyclopedia)
• the study of the most general and abstract features of the world and categories with which
we think: mind, matter, reason, proof, truth, etc. (Oxford Dictionary of Philosophy)
• careful thought about the fundamental nature of the world, the grounds for human
knowledge, and the evaluation of human conduct (The Philosophy Pages)

Philosophical Questions:

1. Why do we have to philosophize?

2. What is meant by Philosophy?
3. What are the characteristics of Philosophical Inquiry?

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Characteristics of Philosophical Inquiry

1. Freedom in Philosophy
2. Intellectual Openness and Critical Inquiry
3. Rational Philosophical Reflection
4. Endless Quest for Meaning
DIVISIONS OF PHILOSOPHY

Philosophy of Thought

• Logic - the study of correct reasoning, especially as it involves the drawing of inferences.
An inference is a rule-governed step from one or more propositions, called premises, to a
new proposition, usually called the conclusion. A rule of inference is said to be truth-
preserving if the conclusion derived from the application of the rule is true whenever
the premises are true.
• Epistemology - the philosophical study of the nature, origin, and limits of
human knowledge. The term is derived from the Greek epistēmē (“knowledge”)
and logos (“reason”), and accordingly the field is sometimes referred to as the theory of
knowledge.
THEORIES OF KNOWLEDGE

1. Skepticism. The attitude of doubting knowledge claims set forth in various areas. Skeptics
have challenged the adequacy or reliability of these claims by asking what principles they
are based upon or what they actually establish. They have questioned whether some such
claims really are, as alleged, indubitable or necessarily true, and they have challenged the
purported rational grounds of accepted assumptions. In everyday life, practically
everyone is skeptical about some knowledge claims; but philosophical skeptics have
doubted the possibility of any knowledge beyond that of the contents of directly felt
experience. The original Greek meaning of skeptikos was “an inquirer,” someone who
was unsatisfied and still looking for truth.

2. Empiricism. The view that all concepts originate in experience, that all concepts are about
or applicable to things that can be experienced, or that all rationally acceptable beliefs or
propositions are justifiable or knowable only through experience. This
broad definition accords with the derivation of the term empiricism from the ancient
Greek word empeiria, “experience.”

3. Rationalism. The view that regards reason as the chief source and test of knowledge.
Holding that reality itself has an inherently logical structure, the rationalist asserts that a
class of truths exists that the intellect can grasp directly. Rationalism has long been the

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rival of empiricism, the doctrine that all knowledge comes from, and must be tested by,
sense experience. As against this doctrine, rationalism holds reason to be a faculty that
can lay hold of truths beyond the reach of sense perception, both in certainty and
generality.

4. Pragmatism. School of philosophy, dominant in the United States in the first quarter of
the 20th century, based on the principle that the usefulness, workability, and practicality
of ideas, policies, and proposals are the criteria of their merit. It stresses the priority of
action over doctrine, of experience over fixed principles, and it holds that ideas borrow
their meanings from their consequences and their truths from their verification. Thus,
ideas are essentially instruments and plans of action.

5. Authoritarianism. The belief that authorities are the sources of true knowledge.

Philosophy of Reality

• Metaphysics - Branch of philosophy whose topics in antiquity and the Middle Ages were
the first causes of things and the nature of being.
• Cosmology - The branch of philosophy dealing with the origin and general structure of
the universe, with its parts, elements, and laws, and especially with such of its
characteristics as space, time, causality, and freedom.
• Theodicy – It focuses on the explanation of why a perfectly good, almighty, and all-
knowing God permits evil. The term literally means “justifying God.”
• Philosophical Psychology – It deals with finding answers on the existence of the soul.
Philosophy of Morality

• Ethics – It is also called moral philosophy, the discipline concerned with what is morally
good and bad and morally right and wrong. The term is also applied to any system or
theory of moral values or principles.
• Aesthetics – This is also spelled esthetics, the philosophical study of beauty and taste. It
is closely related to the philosophy of art, which is concerned with the nature of art and
the concepts in terms of which individual works of art are interpreted and evaluated.

Self-Check

Hi, hope you enjoyed your lesson in Philosophy. Philosophy is really an interesting
discipline; in fact it is one of my favourites back in the day. To keep your interest in philosophy,
try to answer these questions.

1. After having encountered the many definitions of philosophy, how will you create your
own?

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2. What is the importance of philosophy to our lives?

3. Among the five theories of knowledge, which one is your favourite? Why?

Self-Reflect

They say that the three questions a philosopher asks himself are these:

• Who am I?
• Why am I here?
• Where am I going?

Have you asked yourself these questions? Have you thought of these questions before? If
not, try to reflect on these questions then write your answers on the boxes below.

WHO AM I?

WHY AM I HERE?

WHERE AM I GOING?

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TOPIC III: UNDERSTANDING PSYCHOLOGY

Targets

1. Explain the meaning and goals of psychology as a distinct discipline.

2. Discuss the different branches of psychology.
3. Explain the different educational psychology based on how they apply to the
teaching-learning process.

Take Off

To have the first taste of psychology in this module, I am inviting you to do this activity.
Please follow the procedure.

• Close your eyes and repeat this mantra five times “No matter what you say or do to me,
I’m still a great person”.
• Imagine the face of someone who has put you down in some way in the past. After
getting the picture of that person in your mind, say the mantra again five times.

Questions:

1. What was good about saying the mantra? Did you feel good after doing it?
2. What do you think you will need very much from yourself to be able to succeed in acting
upon your mantra or to be able to succeed in improving your weak points?

Content

What is Psychology?

Psychology is the scientific study of the mind and behavior, according to the American
Psychological Association. Psychology is a multifaceted discipline and includes many sub-fields
of study such areas as human development, sports, health, clinical, social behavior and cognitive
processes.

The Beginnings of Psychology as a Discipline

In the early days of psychology there were two dominant theoretical perspectives
regarding how the brain worked, structuralism and functionalism. Structuralism was the name
given to the approach pioneered by Wilhelm Wundt (1832-1920), which focused on breaking
down mental processes intro the most basic components. The term originated from Edward
Titchener, an American psychologist who had been trained by Wundt. Wundt was important
because he separated psychology from philosophy by analyzing the workings of the mind in a
more structured way, with the emphasis being on objective measurement and control.

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Structuralism relied on trained introspection, a research method whereby subjects related

what was going on in their minds while performing a certain task. However, introspection proved
to be an unreliable method because there was too much individual variation in the experiences
and reports of research subjects. Despite the failure of introspection Wundt is an important figure
in the history of psychology as he opened the first laboratory dedicated to psychology in 1879,
and its opening is usually thought of as the beginning of modern experimental psychology.
An American psychologist named William James (1842-1910) developed an approach
which came to be known as functionalism that disagreed with the focus of Structuralism. James
argued that the mind is constantly changing and it is pointless to look for the structure of
conscious experience. Rather, he proposed the focus should be on how and why an organism
does something, i.e. the functions or purpose of the brain. James suggested that psychologists
should look for the underlying cause of behavior and the mental processes involved. This
emphasis on the causes and consequences of behavior has influenced contemporary psychology.

Branches of Psychology

Each branch or field looks at questions and problems from a different perspective. While
each has its own focus on psychological problems or concerns, all areas share a common goal of
studying and explaining human thought and behavior.

Psychology can be roughly divided into two major areas:

1. Research, which seeks to increase our knowledge base

2. Practice, through which our knowledge is applied to solving problems in the real world

Because human behavior is so varied, the number of subfields in psychology is also

constantly growing and evolving. Some of these subfields have been firmly established as areas
of interest, and many colleges and universities offer courses and degree programs in these
topics.

Each field of psychology represents a specific area of study focused on a particular topic.
Oftentimes, psychologists specialize in one of these areas as a career. The following are just
some of the major branches of psychology. For many of these specialty areas, working in that
specific area requires additional graduate study in that particular field.

Abnormal Psychology

Abnormal psychology is the area that looks at psychopathology and abnormal behavior.
Mental health professionals help assess, diagnose, and treat a wide variety of psychological
disorders including anxiety and depression. Counselors, clinical psychologists, and
psychotherapists often work directly in this field.

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Behavioral Psychology

Behavioral psychology, also known as behaviorism, is a theory of learning based on the

idea that all behaviors are acquired through conditioning. While this branch of psychology
dominated the field during the first part of the twentieth century, it became less prominent during
the 1950s. However, behavioral techniques remain a mainstay in therapy, education, and many
other areas.

People often utilize behavioral strategies such as classical conditioning and operant
conditioning to teach or modify behaviors. For example, a teacher might use a system of rewards
in order to teach students to behave during class. When students are good, they receive gold stars
which can then be turned in for some sort of special privilege.

Biopsychology

It is a branch of psychology focused on how the brain, neurons, and nervous system
influence thoughts, feelings, and behaviors. This field draws on many different disciplines
including basic psychology, experimental psychology, biology, physiology, cognitive
psychology, and neuroscience.

Clinical Psychology

Clinical psychology is the branch of psychology concerned with the assessment and
treatment of mental illness, abnormal behavior, and psychiatric disorders. Clinicians often work
in private practices, but many also work in community centers or at universities and colleges.

Others work in hospital settings or mental health clinics as part of a collaborative team
that may include physicians, psychiatrists, and other mental health professionals.

Cognitive Psychology

Cognitive psychology is the branch of psychology that focuses on internal mental states.
This area of psychology has continued to grow since it emerged in the 1960s. This area of
psychology is centered on the science of how people think, learn, and remember.

Psychologists who work in this field often study things such as perception, motivation, emotion,
language, learning, memory, attention, decision-making, and problem-solving.

Comparative Psychology

Comparative psychology is the branch of psychology concerned with the study of animal
behavior. The study of animal behavior can lead to a deeper and broader understanding of human
psychology.

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This area has its roots in the work of researchers such as Charles Darwin and George
Romanes and has grown into a highly multidisciplinary subject. Psychologists often contribute to
this field, as do biologists, anthropologists, ecologists, geneticists, and many others.

Counseling Psychology

Counseling psychology is one of the largest individual subfields in psychology. It is

centered on treating clients experiencing mental distress and a wide variety of psychological
symptoms.

Developmental Psychology

Developmental psychology focuses on how people change and grow throughout life. The
scientific study of human development seeks to understand and explain how and why people
change throughout life. Developmental psychologists often study things such as physical growth,
intellectual development, emotional changes, social growth, and perceptual changes that occur
over the course of the lifespan.

These psychologists generally specialize in an area such as infant, child, adolescent, or

geriatric development, while others may study the effects of developmental delays. This field
covers a huge range of topics including everything from prenatal development to Alzheimer's
disease.

Cross-Cultural Psychology

Cross-cultural psychology is a branch of psychology that looks at how cultural factors

influence human behavior. The International Association of Cross-Cultural Psychology (IACCP)
was established in 1972, and this branch of psychology has continued to grow and develop since
that time.

Educational Psychology

Educational psychology is the branch of psychology concerned with schools, teaching

psychology, educational issues, and student concerns. Educational psychologists often study how
students learn or work directly with students, parents, teachers, and administrators to improve
student outcomes.

They might study how different variables influence individual student outcomes. They
also study topics such as learning disabilities, giftedness, the instructional process, and individual
differences.

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Experimental Psychology

Experimental psychology is the branch of psychology that utilizes scientific methods to

research the brain and behavior. Many of these techniques are also used by other areas in
psychology to conduct research on everything from childhood development to social issues.

Experimental psychologists work in a wide variety of settings including colleges,

universities, research centers, government, and private businesses. Experimental psychologists
utilize the scientific method to study a whole range of human behaviors and psychological
phenomena.

This branch of psychology is often viewed as a distinct subfield within psychology, but
experimental techniques and methods are actually used extensively throughout every subfield of
psychology. Some of the methods used in experimental psychology include
experiments, correlational studies, case studies, and naturalistic observation.

Forensic Psychology

Forensic psychology is a specialty area that deals with issues related to psychology and
the law. Those who work in this field of psychology apply psychological principles to legal
issues. This may involve studying criminal behavior and treatments or working directly in the
court system.

Forensic psychologists perform a wide variety of duties, including providing testimony in

court cases, assessing children in suspected child abuse cases, preparing children to give
testimony and evaluating the mental competence of criminal suspects.

This branch of psychology is defined as the intersection of psychology and the law, but
forensic psychologists can perform many roles so this definition can vary. In many cases, people
working in forensic psychology are not necessarily "forensic psychologists." These individuals
might be clinical psychologists, school psychologists, neurologists, or counselors who lend their
psychological expertise to provide testimony, analysis, or recommendations in legal or criminal
cases.

Health Psychology

Health psychology is a specialty area that focuses on how biology, psychology, behavior
and social factors influence health and illness. Other terms including medical psychology and
behavioral medicine are sometimes used interchangeably with the term health psychology. The
field of health psychology is focused on promoting health as well as the prevention and treatment
of disease and illness.

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Industrial-Organizational Psychology

Industrial-organizational psychology is a branch that applies psychological principles to

research on workplace issues such as productivity and behavior. This field of psychology often
referred to as I/O psychology works to improve productivity and efficiency in the workplace
while also maximizing the well-being of employees.

Some psychologists in this field work in areas such as human factors, ergonomics, and
human-computer interaction. Human factors psychology is an interdisciplinary field that focuses
on topics such as human error, product design, ergonomics, human capability, and human-
computer interaction.

People who work in human factors are focused on improving how people interact with
products and machines both in and out of the workplace. They might help design products
intended to minimize injury or create workplaces that promote greater accuracy and improved
safety.

Personality Psychology

Personality psychology is the branch of psychology that focuses on the study of the
thought patterns, feelings, and behaviors that make each individual unique. Classic theories of
personality include Freud's psychoanalytic theory of personality and Erikson's theory of
psychosocial development.

School Psychology

School psychology is a field that involves working in schools to help kids deal with
academic, emotional, and social issues. School psychologists also collaborate with teachers,
students, and parents to help create a healthy learning environment.

Most school psychologists work in elementary and secondary schools, but others work in
private clinics, hospitals, state agencies, and universities. Some go into private practice and serve
as consultants, especially those with a doctoral degree in school psychology.

Social Psychology

Social psychology seeks to explain and understand social behavior and looks at diverse
topics including group behavior, social interactions, leadership, nonverbal communication, and
social influences on decision-making.

This field of psychology is focused on the study of topics such as group behavior, social
perception, nonverbal behavior, conformity, aggression, and prejudice. Social influences on
behavior are a major interest in social psychology, but social psychologists are also focused on
how people perceive and interact with others.

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Learning Theories in Education

1. Cognitive Development by Jean Piaget
2. Psychosocial Development by Erick Ericson
3. Classical Conditioning by Ivan Pavlov
4. Operant Conditioning by B.F. Skinner
5. Psychosexual/Psychoanalytic Theory by Sigmund Freud
6. Sociocultural Theory by Lev Vygotsky
7. Laws of Learning by Edward Thorndike
Self-Check
Please answer the questions below to assess how much you have understood psychology
as a discipline.
1. How is psychology different from sociology?
2. If you were to become a psychologist, in what field would you like to specialize and
why?
3. For you, what learning theory in education is still strongly relevant in this modern
time?

Self-Reflect
Psychologists say that our behavior is the result of the interaction of heredity, maturation,
and the environment. Thus, to internalize psychology more, I am inviting you this activity.
Fill out the chart below:
My characteristics or traits My characteristics or traits My characteristics or traits not
most similar to those of my most similar to those of my similar to those of my father
father mother or my mother.
Positive Positive Positive

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Negative Negative Negative

Questions:
1. Are there more positive traits than negative traits written on your chart?
2. What is the danger of tending to be “blind” to your negative traits?
3. What traits written on the chart are observable and which ones are not?
4. Why are the traits in the third column not transmitted by your parents? How are they
developed?
5. Are you happy for having those traits acquired from your parents? Have you ever
expressed your gratitude to your parents for having those traits?

TOPIC IV. UNDERSTANDING ECONOMICS

Targets
1. Define economics comprehensively
2. Differentiate the two branches of economics.
3. Explain the different types of economic system as well as the different theories and laws
in economics.

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Take Off
To begin our lesson in economics, please give your insights about these statements:
1. There is no such thing as free lunch.
2. Economics is the painful study of the obvious.

Content

What Is Economics?
Economics is a social science concerned with the production, distribution, and
consumption of goods and services. It studies how individuals, businesses, governments, and
nations make choices on allocating resources to satisfy their wants and needs, trying to determine
how these groups should organize and coordinate efforts to achieve maximum output.

Economics can generally be broken down into macroeconomics, which concentrates on

the behavior of the aggregate economy, and microeconomics, which focuses on individual
consumers and businesses.

Types of Economics

The study of economics is generally broken down into two disciplines.

• Microeconomics focuses on how individual consumers and firm make decisions; these
individuals can be a single person, a household, a business/organization or a government
agency. Analyzing certain aspects of human behavior, microeconomics tries to explain they
respond to changes in price and why they demand what they do at particular price levels.
Microeconomics tries to explain how and why different goods are valued differently, how
individuals make financial decisions, and how individuals best trade, coordinate and cooperate
with one another. Microeconomics' topics range from the dynamics of supply and demand to the
efficiency and costs associated with producing goods and services; they also include how labor is
divided and allocated, uncertainty, risk, and strategic game theory.
• Macroeconomics studies an overall economy on both a national and international level. Its focus
can include a distinct geographical region, a country, a continent, or even the whole world.
Topics studied include foreign trade, government fiscal and monetary policy, unemployment
rates, the level of inflation and interest rates, the growth of total production output as reflected by
changes in the Gross Domestic Product (GDP), and business cycles that result in expansions,
booms, recessions, and depressions.

Micro- and macroeconomics are intertwined; as economists gain an understanding of certain phenomena,
they can help us make more informed decisions when allocating resources. Many believe that
microeconomics' foundations of individuals and firms acting in aggregate constitute macroeconomic
phenomena.

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Two Methodologies in Economics

Positive vs. Normative Economics

Positive economics and normative economics are two standard branches of modern
economics. Positive economics describes and explains various economic phenomena, while
normative economics focuses on the value of economic fairness or what the economy should be.

To put it simply, positive economics is called the "what is" branch of economics.
Normative economics, on the other hand, is considered the branch of economics that tries to
determine people's desirability to different economic programs and conditions by asking what
"should" be or what "ought" to be.

Importance of Positive and Normative Economics

Common observations indicate that discussions around public policies typically involve
normative economic statements. A higher degree of disagreements persists in such discussions
because neither party can clearly prove their correctness.

Though normative statements are generalized and subjective in nature, they act as the
necessary channels for out-of-the-box thinking. Such opinions can form the foundation for any
necessary changes that may have the potential to completely transform a particular project. But
normative economics cannot be the sole basis for decision-making on key economic fronts.
Positive economics fill in for the objective angle that focuses on facts and cause-and-effect.
Coupled with positive economics, normative economics may be useful in establishing,
generating, and fulfilling new ideas and theories for different economic goals and perspectives.

A clear understanding of the difference between positive and normative economics may
lead to better policy-making if policies are made based on a balanced mix of facts (positive
economics) and opinions (normative economics). Nonetheless, numerous policies on issues
ranging from international trade to welfare are at least partially based on normative economics.

The 3 Key Economic Questions every Society must answer:

Who? What? and How?

As we have been learning, everyone is forced to deal with scarcity. We, as individuals,
are forced to deal with it. We, as families, are forced to deal with it. And we, as societies, as
countries, are forced to deal with it. The way we, as individuals, face it is through the choices we
make. And since all of us make different individual choices, it stands to reason that we all use
different methods, or reasoning, to arrive at those choices. Different societies & countries also
use different methods to arrive at their choices. Because of scarcity, every nation is faced with
“The 3 Key Economic Questions:

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• Who – consumes the goods & services produced in society?

“For whom?” is a public choice question. All economic systems must determine which
goods and services will be available for public use and which for private use.

• What –goods & services should be produced?

“What to produce?” is an allocation question. All economic systems must determine how
to allocate productive resources in the form of land (natural resources/raw materials),
labor (work for which we earn pay) and capital (human - education & job training)
(physical – buildings, equipment & tools).

• How – should goods & services be produced?

“How to produce?” is an efficiency question. All economic systems must determine how
goods and services will be produced.

How do different economic systems respond to the 3 Key Economic questions? First of all, we
need to define exactly what an “Economic System” is:

• The institutional framework of formal and informal rules that a society uses to
determine what to produce, how to produce and how to distribute goods and services.

Another, more popular term for economic system is economy. An economy, or economic
system, is the structural framework in which households, businesses, and governments undertake
the production and consumption decisions that allocate limited resources to satisfy unlimited
wants and needs.

An economic system is primarily characterized by its key institutions, especially those

relating to the ownership and control of resources and the means of production. Two real-world
economic systems that differ based on key institutions are capitalism and communism.
Capitalism is an economic system in which ownership and control is largely in private hands
(businesses and households), as opposed to public hands (government). One of the key
institutions underlying capitalism is private property rights. Communism, in contrast, is an
economic system in which ownership and control predominately rests with government.
Socialism is a third noted economic system that borrows institutions from both capitalism and
communism.

Economic systems can be categorized according to who makes most of the decisions in
an economy. Most economies can generally categorized as one of two kinds:
• Market Economy
An economy that relies on a system of interdependent market prices to allocate
goods, services, and productive resources and to coordinate the diverse plans of
consumers and producers, all of them pursuing their own self-interest.
• Command Economy
An economy in which most economic issues of production and distribution are
resolved through central planning and control.

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So, how do different economic systems respond to the three basic economic questions? In
a socialist or command system, the central authority determines what, how, and for whom goods
and services will be produced. A Mixed System incorporates elements of both command and
market systems in determining answers to the three questions. Mixed economies with strong
market components also include a public goods and services sector, just as command economies
like Cuba include a private goods and services sector.

• In a market economy, most of the decisions in the economy about what to produce,
how to produce it and who receives it are made by individuals and firms.

At the other end of the spectrum:

• In a command economy, government officials make most of the decisions in the

economy about what to produce, how to produce it and who receives it.

Most economic systems also contain elements of tradition or repeating decisions in ways
made at an earlier time or by an earlier generation. Today, nearly all economies are actually
mixed, in that some economic decisions are made by individuals and private firms, but some are
also made by government officials, either through rules and regulations or through government-
owned firms.

The U.S. economy leans toward the market-oriented side of the spectrum. An economy
like Cuba or North Korea is near the command economy side of the spectrum. But the dividing
line between market and command economies in most nations is blurry rather than bright.

Market Economies (“Capitalism”)

Capitalism is undoubtedly at the top of any list of economic systems operating in the
modern world. This system is based on: (1) private property--private ownership of resources and
the means of production, (2) individual liberty--relative freedom on the part of the resource
owners to use their resources as they see fit, and (3) competitive markets--a system of relatively
competitive markets.

Under capitalism, governments establish the basic rules of the game and are responsible
for the production of public goods, but the vast majority of resource allocation decisions are
undertaken by individuals, as either consumers or producers. The United States is one of the
more noted examples of capitalism. However, most modern industrialized economies of Europe,
Asia, North America, and South America operate under capitalism.

Command Economies (“Socialism”)

In theory, socialism is the transition between capitalism and communism and is based on:
(1) government ownership of resources and the means of production, (2) worker control of
government, and (3) income distributed according to needs. As practiced in the real world,
socialism is an economic system based on (1) nationalized industries--government ownership

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and control of key industries and (2) central planning--relatively detailed, but not comprehensive,
resource allocation decision making by the central government.

Under real world socialism, governments exert extensive control over resource allocation
decisions, primarily involving key industries such as transportation, energy production,
communication, and health care. While Sweden exemplifies modern socialism, several European
nations have practiced varying forms of socialism over the decades.

Command Economies (“Communism”)

In theory, communism is an economic system based on: (1) a classless society, (2)
common ownership of resources, (3) no government, and (4) income distributed according to
needs. As practiced in the real world, communism is an economic system based on (1)
government ownership--government ownership and control of most resources and the means of
production and (2) central planning--excruciatingly detailed and comprehensive resource
allocation decision making by the central government.

Under real world communism, governments undertake the vast majority of the resource
allocation decisions, with few decisions undertaken by individuals. The former Soviet Union was
the primary example of real world communism before if disbanded in the late 1980s. China,
Cuba, and a scattering of African nations continue to operate under various forms of
communism.

Two Pure Extremes

Capitalism, communism, and socialism are three real-world economic systems that
exhibit varying degrees of decision making by individuals and governments and are part of a
continuum bounded by two theoretical extremes--pure market economy and pure command
economy.

A pure market economy is an idealized economy that relies exclusively on decisions

made through markets to allocate resources. A pure command economy is an economy that relies
exclusively on decisions by governments to allocate resources. Neither type of economic system
currently exists in the world, nor has either ever existed. Both ideals are best considered
benchmarks that can be used for comparison. The key word that makes each a theoretical
extreme is "exclusively." Real world economic systems rely on both markets and governments
to allocation resources. While some real world economic systems come close to one extreme or
the other, they never actually reach the ideal.

Factors of Production

1. Land – this is raw materials available from mining, fishing, agriculture

2. Capital – This is a manufactured item used to aid production, for example, machines,
factories and computers
3. Labor – Human workers who are involved in producing the good.

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4. Entrepreneur – the individual or business who take the initiative to set up a business and
employ different factors of production (labor, capital and entrepreneur)

Laws of Demand and Supply

Law of supply explains the relationship between price and the quantity supplied. If an
object’s price on the market increases, the producers would be willing to supply more of the
product. If the object’s price on the market decreases, they are less willing to supply a lot and the
quantity decreases.

Law of demand explains the relationship between between price and quantity demanded.
If an object’s price on the market increases, less people will want to buy them because it is too
expensive. If the object’s price on the market decreases, more people will want to buy them
because they are cheaper.
Both of these laws help determine the roles that producers and consumers take in the world of
economics. There is still much to be learned, but the two laws help to concentrate the main ideas
in supply and demand that help make sense of the connection between price change and quantity
change.

Congratulations, you have reached this far. I’d like to inform you that this
is the last self-check for this module. To end this well, will you please answer the following
questions:

1. What does economics want to address?

2. What is the difference between microeconomics and macroeconomics?
3. What type of economic system is present in the Philippines?
4. Based on the laws of demand and supply, how will you state the law of market
equilibrium?

Self-Reflect

How do you see the relevance of economics in the development of your decision making
skills? Write your answer on the space below.

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