What are 'Mainstream Economics'

Mainstream economics is a term used to describe schools of economic thought considered to be orthodox. Many of the underlying categories within and concepts central to mainstream economics are readily taught at universities. Many of the underpinning models and beliefs are based on concepts that involve economic scarcity, the role of governmental regulation or other action in effecting an actor's decision, the concept of utility and the idea that people are purely rational actors who will make decisions that are based purely on available information and not emotion.

Mainstream economics is not a branch of economics in and of itself, but is used to describe theories often considered part of the neoclassical economics tradition. Mainstream economics follows rational choice theory, which assumes that individuals make decisions that will maximize their own utility, and uses statistics and mathematical models to demonstrate theories and evaluate various economic developments.

BREAKING DOWN 'Mainstream Economics'

Mainstream economics, the study of rational actors in a world of trade-offs, has had several challengers. Schools of economic thought outside of mainstream economics — called heterodox economics — are more skeptical of the role of the government and the rationality of actors. Recent economic theorists have become open to the thought that people are not entirely rational, markets are not entirely efficient, and factors that affect an actor's decision are not always quantifiable. These beliefs seem to have become more commonplace since the global financial crisis. Mainstream economics does not focus on economic concerns gaining momentum, such as sustainability and pollution.

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