Economic Methodology Flashcards

Vocabulary flashcards covering fundamental concepts in Economic Methodology, including data analysis, modeling, RCTs, Duflo's research, economic assumptions, and Ceteris Paribus.

Economics

A social science concerned with the behaviour of people and groups and the way it affects markets and economies.

Empirical observation

A method used by both natural sciences and economics to gather data and evidence, such as economists collecting data on prices, production, jobs, and consumption.

Econometrics

The use of statistical techniques by economists to analyze economic data and identify patterns, relationships, and trends.

Modelling

The use of mathematical models to represent, explain, analyze, and predict complex economic behaviour, such as responses to tax changes or interest rate changes.

Controlled experiments

Experiments where variables are manipulated to establish causal relationships, which are common in natural sciences but rare in economics due to ethical and practical constraints.

Predictability in Economics

The degree to which outcomes can be forecasted, which is lower in economics than in natural sciences because economics deals with human behaviour influenced by social, cultural, and psychological factors.

Randomised Controlled Trials (RCTs)

An economic research methodology that involves randomly assigning subjects to either a treatment group or a control group to isolate the impact of a policy or intervention.

Esther Duflo

An economist who, along with her colleagues, was instrumental in applying randomised controlled trials (RCTs) to test anti-poverty interventions like conditional cash transfers and microfinance.

Economic Assumptions

Simplifying conditions made by economists to help develop theories that explain economic behaviour, such as assuming consumers act rationally.

Rational Consumer Assumption

The economic assumption that consumers make decisions that maximise their own utility and satisfaction.

Ceteris Paribus

A Latin phrase meaning 'all other things being equal', used in economics to isolate the effect of a specific variable while holding all other relevant factors constant.

Law of Demand

An economic principle stating that, ceteris paribus, when the price of a good or service decreases, the quantity demanded increases, and when the price increases, the quantity demanded decreases.

Supply and Price Relationship

An application of ceteris paribus that examines how price directly impacts the quantity producers supply while holding production costs, technology, taxes, subsidies, and regulations constant.