Applied economics is the application of
economic theory and
econometrics in specific settings. As one of the two sets of fields of economics (the other set being the
core), it is typically characterized by the application of the
core, i.e.
economic theory and
econometrics, to address practical issues in a range of fields including
demographic economics,
labour economics,
business economics,
industrial organization,
agricultural economics,
development economics,
education economics,
health economics,
monetary economics,
public economics, and
economic history. The process often involves a reduction in the level of abstraction of this core theory. There are a variety of approaches including not only empirical estimation using
econometrics,
input-output analysis or simulations but also case studies, historical analogy and so-called common sense or the "vernacular". This range of approaches is indicative of what
Roger Backhouse and Jeff Biddle argue is the ambiguous nature of the concept of applied economics. It is a concept with multiple meanings. Among broad
methodological distinctions, one source places it in neither
positive nor
normative economics but the
art of economics,
glossed as "what most economists do".