01:220:102 Chapter Notes - Chapter 2: Empiricism

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01:220:102 Full Course Notes
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01:220:102 Full Course Notes
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A model is a simplified description of reality. Economists use data to evaluate the accuracy of models and understand how the world works. Experiments help economists measure cause and effect. Economic research focuses on questions that are important to society and can be answered with models and data. Empiricism is at the heart of all scientific analysis. Economists do not expect this process to reveal the true model of the world since it is so complex, but expect to find models useful to the world. Testing with data separates the good models from the bad (either fix or replace completely) All scientific models make predictions that can be checked with data. Model: simplified description, or representation, of the world. Earth is flat on maps and gps but when flying, the spherical shape matters. Use the model that is best suited to analyze the problem at hand. More important for the model to be useful than precisely accurate.

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