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Nobel prize Essay The study of economics is a science. And like all sciences, it is firmly based upon the scientific method. It is important to remember this concept in the paper as it would be discussing implications of a paradigm shift in economics towards new schools of thought and applications of various methodologies. Economics, being a science, through trial and error and the application of the said scientific method, has evolved over the years since its original inception and has even garnered a certain place in the Nobel prize awards. Also, since the original conceptions of the early theories of economics which have been formulated by Smith, Ricardo, and Marshall, economics has come a long way and has integrated many discussions that belonged originally to other related disciplines and fields and employed its use under its own wing. However, as many have pointed out and as is becoming evident especially in todays modern age of financial crisis and market crashes, the science and discipline needs a new paradigm shift with respect to its application, understanding, and even methodological processes. Recently, BusinessWeek has published a story regarding the current failure of economists to not only predict the current financial crisis in the United States and the global economy, but also were not able to solve these issues using existing tools in economics. The disciplined then faces the question of whether or not economics needs a new paradigm shift. The objective of this paper is to explain, through analysis and understanding the basic frameworks of economics and how they work, why economics does not need a paradigm shift. In order to do this, the paper would be approaching the problem by understanding modern microeconomic and macro economic theory. It would also be the objective of this paper to understand the various anomalies on why such recent commentary has been made on the science and what are the probable ways in order to integrate such anomalies into the discipline in modern times. Towards the end of this paper, it is the hope that the reader is convinced that the science does not need a paradigm shift but rather merely needs to integrate such new problems into the current paradigm and framework in approaching the discipline and the problems that it tries to address. From the realm and point of view of microeconomics, there are various essential founding concepts that eventually launch into the more complicated discussions under microeconomics. Recent cutting edge microeconomic studies focus on game theory, simultaneous equilibria methods for consumers and producers, and even quantification of human behavior. In fact, if the paper was to summarize all recent activity under the academic wing and discussion of microeconomics, it would fill volumes and volumes of pages. However, what is important for the reader to realize is that even the most complicated microeconomic theories involving long mathematical equations and difficult matrix solutions are basically captured and can be derived from its founding theories such as utility maximization, the theory of consumer behavior, and understanding of perfect markets. Again, however, many have commented that the basic precepts that revolve around these founding microeconomic theories eventually produce anomalies that might as well create a new paradigm for approaching economic analysis because such founding theories do not actually reflect in the real world. Let us first take for example the discussions of utility maximization. The demand and supply framework which is the basic foundation of economics could be further distilled to understanding utility theory and the way consumers and producers are able to meet in the market by maximizing the levels of their happiness. In utility theory, there is the marginal utility curve which is a locus of points comparing the trade-off advantages and disadvantages between two goods any given set up. The tangency of this utility curve with a budget line of consumers eventually dictate areas which they choose to consume. Basically, standard utility theory in economics has the underlying principle and essential nature of perfect consumer rationality and consumer choice. Recently, however, social scientists, and even economists in some schools of thought, have pointed out that consumers are far from rational and could not conceivably draw a perfect utility curve that becomes the basic foundation for microeconomics. As such anomaly and arguments have pointed out, studies have reflected that consumers in the real world do not reflect perfect rationality because of the inability of human beings to perfectly compute various opportunity cost trade-offs simultaneously considering other variables. Furthermore, critics of utility theory have pointed out that the assumption of all things held constant that is ever so important in constructing basic microeconomic consumer choice is not actually applicable in real world situations. Therefore, as these detractors of modern economic theory point out, there must be a paradigm shift in the discipline.