ECON 110 Lecture 1: Ch. 2 Scientific Method and Economic Theories

• School: Queen's University
• Department: Economics
• Course: ECON 110
• Professor: Ian James Cromb

Document Summary

Economics is the only field in which two people can get a nobel prize for saying exactly the opposite thing. Positive economics is strictly limited to if then statements. Thus positive economics lends itself to empirical testing by identifying the if conditions to subsequently find out whether the then has materialized . A theory is, after all, a framework (or, more esoterically, a model) for understanding the basics of phenomena. Decision-makers" motives, e. g. what a consumer would like to do, what a bureaucrat would aim at, what would the prime minister like to choose. The physical relations underlying environments where decisions are made, e. g. production relations, conditions for consumers such as the distance to a major store. Causal links (if then) to be tested, e. g. increased government expenditures will create jobs, a higher payroll tax will lower employment. The endogenous and exogenous variables in the framework.