Economic Reasoning

"How did you come to that conclusion?"

People don't often ask that question about the assertions made by economic pundits—economists and media commentators.

When people draw conclusions regarding economic issues, they should be able to explain why they reach those conclusions. If they don't explain, you should call those conclusions into question. But, you need the thinking tools required to help you formulate those questions.

In this section we will discuss the reasoning processes required to come to valid conclusions about economic activity.

Economic Theory

We tend to underestimate the importance of theory in most of the activities in our lives. By not testing observations with sound theory people frequently recommend actions detrimental to their desired results.


In addition to clear economic theory, one needs to apply that theory on a consistent basis. For that reason we have adopted the methodology of the Austrian school.


The study of reason regarding any subject requires the inclusion of philosophy. We will discuss philosophy in the context of economic reasoning.

Systems Thinking

All economic activity occurs within the framework of a system. Having some understanding of systems thinking aids in the understanding of economic reasoning.

General Semantics

General semantics provides thinking tools for better understanding and communicating economic concepts.

Journal–Economic Reasoning

This link will take you two comments I have made in the free-market Journal in the category of Economic Reasoning.

Economic Reasoning — Clear thinking for market action.