ECON 221 Chapter Notes - Chapter 2: Natural Experiment, Scientific Method
Document Summary
A model is a simplified description of reality. Economists use data to evaluate the accuracy of models and understand how the world works. Economic research focuses on questions that are important to society and can be answered with models and data. All scientific models make predictions that can be checked with data. A key strength of economic analysis is the amount of data used (relies on a large sample) which strengthens the force of an empirical argument because researchers can make more precise statements. When correlation does not imply causality (causality is the relationship between cause and effect; the principle that everything has a cause: omitted variables, reverse causality. Methods for determining cause and effect: experiment, natural experiment. The scientific method is the name for the ongoing process that economists and other scientists use to (a) develop mathematical models of the world and (b) test those models with data.
