ABSTRACT
Although economics is a social science it has developed following the model of the natural sciences, particularly of classical physics. Economic policy has much more in common with medicine than with engineering. Thus, economics should have taken biology instead of physics as a source of inspiration from natural sciences.
One of the analogies between economics and medicine is the importance of diagnostics in both professions. In this respect, the problem with mainstream economics is that it has devoted most of its effort to showing the non-existence of any economic disease.
While medicine is based on empirical sciences such as biology and chemistry, applied economics is mainly based on a deductive theory whose assumptions have not been empirically validated.
Economic relationships are embedded in the social structure. However, mainstream economic analysis takes into consideration only economic factors and sets aside other factors, such as the sociological or psychological ones. The applied economist or the policy-maker has to take into account all the factors that are relevant for the case under study, be they quantitative or qualitative, including social variables such as power, beliefs, status, norms, cooperation, conflict, and so on.
If the practitioner accepts the influence of non-economic factors on economic outcomes she may arrive at very different conclusions from the usual ones in mainstream economics.
