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ib theory of knowledge notes

Economics and theory of knowledge

UPDATED ON - 11 OCT 2019

Economics and Theory Of Knowledge

1) Group 3 and Theory Of Knowledge

2) Sample Questions

3) Core Concepts of Economics and their ToK relevance

4) Economics and the international dimension


Group 3 and Theory Of Knowledge
Students of group 3 subjects study individuals and societies. This means that they explore the interactions between humans and their environment in time and place. As a result, these subjects are often known collectively as the “human sciences” or “social sciences”.

As with other subject areas, there is a variety of ways in which to gain knowledge in group 3 subjects. For example, archival evidence, data collection, experimentation, observation, inductive and deductive reasoning can all be used to help explain patterns of behavior and lead to knowledge claims. Students in group 3 subjects are required to evaluate these knowledge claims by exploring knowledge issues such as validity, reliability, credibility, certainty, and individual as well as cultural perspectives.

The relationship between each subject and the theory of knowledge (TOK) is of crucial importance and fundamental to the Diploma Programme. Having followed a course of study in group 3, students should be able to reflect critically on the various ways of knowing and the methods used in human sciences, and in doing so, become the “inquiring, knowledgeable and caring young people” of the IB mission statement. During the economics course, a number of issues will arise that highlight the relationships between TOK and economics. Some of the questions that could be considered during the course are identified within the syllabus (see the section “The foundations of economics” in “Approaches to the teaching ofeconomics”, as well as “Syllabus”). Teachers and their students are encouraged to explore further questions of their own.


Sample Questions

  • Theory of knowledge: potential connections What distinguishes social science from a natural science?
  • Is there a “social scientific method” as opposed to a “natural scientific method”? What might be the similarities and differences?
  • What are the roles played by abstract reasoning and concrete evidence in constructing economic theory?
  • To what extent is economics value-free?
  • Are economic theories independent of culture?
  • Is it possible for economic laws to change over time?
  • What are the limitations of the use of diagrams and charts in economics?
  • What is the role of emotion and creativity in economics?
  • What are the implications of economics is based, ultimately, on human psychology?
  • To what extent should ideas of fairness and justice inform economic thinking?
  • What is a model in economics? What does it do? Does it matter that many of the models we use in economics do not correspond well to reality? 
  • What are the implications of the assumption of ceteris paribus? Do other areas of knowledge make a  similar assumption?
  • How do we test knowledge claims in economics? Should all knowledge claims in economics be testable? 
  • If a claim is not testable, is it meaningless?
  • Is there a different method of justifying qualitative rather than quantitative knowledge claims? If so, does this lead to one or other being inherently more reliable?
  • What criteria should be adopted for evaluating normative statements in economics?
  • What is meant by “rationality” in economics? Are there different types of “economic rationality”?
  • If economics studies actual human behavior, should it also study irrational human behavior?


Core Concepts of Economics and their ToK relevance

  • Competitive markets: Demand and supply - Theory of knowledge: potential connections To what extent is it true to say that a demand curve is a fictional entity?
    • What assumptions underlie the law of demand?
    • Are these assumptions likely to be true?
    • Does it matter if these assumptions are actually false?


  • Government intervention - Theory of knowledge: potential connections 
    • In what sense are we morally obliged to pay taxes? Is this the result of a promise that we have made ourselves? When was this promise made? (Make a distinction here between moral and legal obligations.) To what extent is the government morally obliged to provide healthcare and welfare benefits to the unemployed?


  • Market Failure - Theory of knowledge: potential connections
    • To what extent is the obligation to seek sustainable modes of consumption a moral one?
    • What knowledge issues are involved in assessing the role of technology in meeting future patterns of consumption and decreasing the negative externalities of consumption associated with fossil fuels?
    • What are the knowledge issues involved in determining what is a rational cost to pay for halting climate change?
    • How could we know if economically more developed countries are morally justified in interfering in the development of economically less developed countries on the grounds of climate change?
    • How can we know when climate change is sufficiently serious to warrant government interfering in the freedom of its citizens to consume?
    • How can we calculate the external costs of producing and running items such as light bulbs or motor vehicles? For example, low energy light bulbs consume less energy but they require more energy to produce, and some brands contain materials that are harmful to the environment such as mercury. Hybrid cars consume less energy to run but consume more energy to produce. What are the problems in knowing whether climate change is produced by human activity? 


  • Theory of the firm and market structures (HL only) - Theory of knowledge: potential connections
    • Is it rational to take into account costs already incurred in deciding whether a business venture should be terminated or whether it should receive more funds? 
    • How can we know how to determine the balance of government policy between promoting competition in the interest of the consumer and allowing profitability in the interest of firms?


  • The level of overall economic activity - Theory of knowledge: potential connections
    • What is the empirical evidence for the existence of the business cycle? How do we decide whether this evidence is sufficient?


  • Aggregate demand and aggregate supply - Theory of knowledge: potential connections
    • Business confidence is a contributing factor to the level of AD. What knowledge do issues arise in attempting to measure business confidence?
    • The Keynesian and Monetarist positions differ in the shape of the AS curve. What is needed to settle this question: empirical evidence (if so, what should be measured?), the strength of theoretical argument, or factors external to economics such as political conviction?


  • Macroeconomic objectives - Theory of knowledge: potential connections
    • What criteria can be used to order macroeconomic objectives in terms of priority? Are such criteria external to economics (that is, normative)?
    • Is economic growth always beneficial? What could be meant by the word “beneficial”? Is there always a cost to economic growth?
    • The notion of fairness can be approached from a number of perspectives—equality of opportunity, maximizing the income of the least well-off group, and absolute equality of income. Which of these notions seems to be most attractive? Why? Examine what each of these perspectives suggests is a fair distribution of income.
    • Equality of opportunity implies correcting for social advantage (for example, the government might devote more resources to the education of a child brought up in less prosperous circumstances than one brought up in a comfortable home whose parents are university lecturers). How far should the state go in making such corrections? Should all parents be forced to read to their children so that no child should be at a disadvantage? Should the state attempt to correct for the uneven distribution of natural abilities such as IQ (intelligence quotient) by devoting proportionally more resources to children of less than average IQ.


  • Fiscal policy - Theory of knowledge: potential connections
    • In one sense the imposition of taxes by the government on individuals amounts to a restriction of individual freedom. How can we know when such government interference in individual freedom is justified?



  • Supply-side policies - Theory of knowledge: potential connections
    • How can we know whether the government should support pure research, which might contribute to the sum total of human knowledge but which might never have an impact on technology? What other knowledge issues are relevant to an investment in pure research?
    • Investment in education and training is a common supply-side policy. What other reasons could there be for supporting the education of the population? What knowledge did issues arise in answering the question as to whether the government should shoulder this responsibility or whether it should be left to the market?


  • International trade - Theory of knowledge: potential connections
    • Are there moral as well as economic arguments in favor of free trade?


  • Economic Integration - Theory of knowledge: potential connections 
    • What criteria can be used to assess the benefits and costs of increased economic integration? Might increased economic integration ever be considered undesirable?


  • Economic development - Theory of knowledge: potential connections
    • What are the knowledge issues involved in compiling a list of development goals?
    • Does the term “economic development” mean different things in different cultures?
    • Are there two ways of thinking about economics: from the point of view of a developed country or from that of an economically less developed country? If so, what Are there two different sets of values in which such a distinction is grounded?
    • How can we decide if the distinction between economically more developed countries and economically less developed countries is a meaningful one given that economic development itself might not be so clearly defined?


  • Measuring development - Theory of knowledge: potential connections
    • What criteria could we use to determine whether a particular method for measuring development is effective?
    • What knowledge issues might be encountered in constructing a composite indicator to measure development?


  • The role of international debt - Theory of knowledge: potential connections
    • For each factor, what would you consider to be sufficient evidence that it plays a role in enhancing or inhibiting development?


  • The balance between markets and intervention - Theory of knowledge: potential connections
    • What criteria can economists use to decide on the balance between markets and intervention? Is development economics dependent upon external normative notions such as what constitutes a good or fulfilled life?


Economics and the international dimension

The economics course embodies global and international awareness in several distinct ways. Two of the four sections of the course are devoted to specific areas of economics that contribute to international awareness and understanding—section 3: international economics, and section 4: development economics. In addition, earlier topics in the course explore the ways in which different countries deal with common economic issues such as government intervention, market failure, sustainability, and achieving macroeconomic objectives. Inherent in the syllabus is a consideration of different perspectives, economic circumstances, and social and cultural diversity.

Economics seeks to develop international understanding and foster a concern for global issues, as well as to raise students’ awareness of their own responsibility at a local and national level. Economics also aims to develop values and attitudes that will help students reach a degree of personal commitment in trying to resolve these issues, appreciating our shared responsibility as citizens of an increasingly interconnected world.






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