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Economics

Economics. Theories and Data. Positive statements Normative statements Most disagreement among the economists is about normative stuff But remember about preconceptions. Theory – what do you think a theory is? A techy way to think about: Real world phenomena and what we want to explain

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Economics

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  1. Economics Theories and Data

  2. Positive statements • Normative statements • Most disagreement among the economists is about normative stuff • But remember about preconceptions

  3. Theory – what do you think a theory is? • A techy way to think about: • Real world phenomena and what we want to explain • Phenomenon in a theory = a variable • Well defined item • Can take on many values • Exogenous variable • Endogenous variable

  4. A model • An abstract that relates variables • Can be manipulated easily • Do not have to break a real thing • !!! Used as a synonym for “theory” all the time • Model + Variables = Theory • Good theory • Clear • Simple • General • Refutable

  5. A theory is a guess, has to be tested to obtain credibility • Rejection vs confirmation vs proof • Experiments vs statistics/econometrics • Correlation vs causation • !!! Used as a synonym for “theory” all the time • Model + Variables = Theory • Good theory • Clear • Simple • General • Refutable

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