Economic vocabulary is a story that's hundreds of years in the making

Economic lingo is a little weird. There are the words we use all the time, like “inflation” and “growth,” but then what about terms like “disinflation” or “soft landing”? To really understand where the language (and style) comes from, it helps to ask the folks who have authority on economic terminology, like the editors behind the “New Palgrave Dictionary of Economics.”

“It's really an encyclopedia,” said Matías Vernengo at Bucknell University. “But economists are not good with language, and we call it a dictionary.”

Vernengo is one of the latest in a line of editors who has been putting the dictionary together. Originally published in 1894 as "Palgrave’s Dictionary of Political Economy,” many editions of the book have been released over the last century, with the latest in 2018. According to the publisher, it now includes some 3,000 chapters representing several centuries’ worth of economic thinking, including the Scottish economist who is the first stop on this vocab journey: Adam Smith.

Adam Smith, mid-1700s

According to Vernengo, Isaac Newton’s ideas about physics were popular when Adam Smith was writing in the mid-to-late 1700s. Smith channeled that.

“His ideas were heavily influenced by Newton,” said Vernengo. “One of his first papers was on astronomy, and he uses the term ‘gravitation.’ Market prices gravitate around natural prices.”

Modern economics owes a lot to Smith’s writing. Take the phrase “natural interest rates,” for example: That can be traced back to Adam Smith and the metaphors he used in his iconic treatises like "The Wealth of Nations.”

But there are still more stops to come, and the next is about a century after Smith’s death: the rise of neoclassical economics.

Neoclassical economics, circa 1890

“Neoclassical economics actually begins with a group of thinkers most people have probably never heard of,” said Emma Kast at Bennington College. “Their names are William Stanley Jevons, Alfred Marshall, Léon Walras. These figures were really trying to make economics into something objective and scientific.”

They adopted the use of words like “supply” and “demand.” In a lot of ways, neoclassical economics is sort of the foundation of modern economics — and the language economists use.

But there’s still one more stop: the 20th century. And this is really where econ terms start to take off.

The 1900s and beyond

“In the 1920s, 1930s, and 1940s, you start getting sort of the big categories,” said Gonçalo Fonseca at the Institute for New Economic Thinking. “The ‘GDPs’, the ‘consumptions,’ the ‘investment spending,’ and all that.”

A lot of these terms emerged from historic events like the Great Depression, which were huge turning points for the economics profession — both in what economists measured and how they talked about the economy.

“There’s this one guy called Ragnar Frisch who was the head of the Econometric Society in the 1940s,” said Fonseca, “and he just loved making up new words: ‘macroeconomics,’ ‘microeconomics,’ ‘econometrics.’ These were all his inventions.”

Despite this multicentury history, economic vocabulary is still being invented and reinvented with folks like Matías Vernengo at Bucknell University at the forefront.

“One of the things we're trying to do, because there is a push in the profession, is what we call ‘decolonize the dictionary.’ Bring perspectives from other parts of the world,” said Vernengo.

That’s why he and his coeditors at the New Palgrave Dictionary of Economics are working on a new edition that’s due out next year.