Empirical Analysis in Economics

Role of Data in Developing Economic Theories

Challenges in Economic Data Collection and Interpretation

Data Sources for the History's Hockey Stick Graph

The Interplay of Data and Theory in Economics

The Social Role of Economic Data

Foundations of an Economic Inquiry

An economist is studying a country where the average income has remained stagnant for several decades, while a neighboring country has experienced rapid income growth. To begin a formal economic analysis comparing these two countries, which of the following actions represents the most critical and foundational first step?

The Role of Data in Economic Theory

In the practice of economics, the standard approach is to first formulate a complete and abstract theoretical model, and only then to seek out real-world data that supports the model's conclusions.

An economist's work begins with a question about the world. Match each economic question below with the most appropriate foundational dataset needed to begin the investigation.

A researcher is undertaking a new economic study. Arrange the following steps into the logical sequence that reflects how empirical information is typically used as the foundation for economic analysis.

The Starting Point of Economic Analysis

Because economic analysis begins with observations and evidence from the real world, such as historical figures for income and population, it is considered an ____ science.

A political commentator on a news program claims, "Based on my new theoretical model of market behavior, it's clear that the recent tax cuts have been a complete failure and have harmed the economy." The commentator provides no statistics, historical comparisons, or other forms of evidence to support this statement. From the perspective of how economic analysis is conducted, what is the most significant weakness in the commentator's argument?

Two economists are debating the cause of a recent increase in consumer spending in a country.

Economist A argues, "My theoretical model, which has been widely published, predicts that lower interest rates always lead to higher spending. Since the central bank recently lowered rates, this is the clear cause." Economist A does not present any data on actual consumer behavior or borrowing patterns from the period in question.

Economist B argues, "While interest rates did fall, my analysis of household-level data from the past quarter shows that the increased spending was concentrated among high-income households whose consumption is not typically sensitive to interest rate changes. The data also shows a simultaneous, large payout of annual bonuses in the financial sector."

Based on the foundational principles of how economic analysis is conducted, which economist's conclusion is more credible and why?