1.1.1c inability to conduct science experiments

natural sciences

deal with physical matter and inanimate objects, highly predictable and can be isolated completely within an enclosed laboratory environment.

social sciences

study human behavior, decisions, and interactions as humans possess free will, emotions, and changing motivations, their behavior is inherently less predictable and cannot be fully contained or isolated.

why are controlled scientific experiments impossible?

impossible to control external variables, dynamic and changing nature of human behaviour, ethical and practical constraints

controlled experiments: impossible to control external variables

economists operate in the real world where billions of economic agents make decisions simultaneously, it is impossible to isolate a single economic event while holding the rest of the global economy completely still.

controlled experiments: changing human behaviour

consumer tastes, societal trends, psychological moods, and expectations change constantly, something that worked during a boom period might fail completely during a recession because human psychology and confidence levels have shifted

controlled experiments: ethical and practical constraints

economists cannot ethically or practically manipulate real-world human lives just to test a hypothesis.

controlled experiments: ethical and practical constraints examples

an economist cannot deliberately trigger hyperinflation or shut down a major industry for six months just to gather data on how households react to poverty or extreme price instability

how do economists overcome not being able to perform scientific experiments?

use of empirical data, natural experiments and statistical modelling

overcoming lack of controlled experiments: use of empirical data

economists look backward at real-world data from past events, they analyze historical periods to look for repeating patterns and cause-and-effect relationships.

overcoming lack of controlled experiments: natural experiments

Sometimes, real-world events naturally create a testing environment.

overcoming lack of controlled experiments: natural experiments examples

if one US state raises its minimum wage while a neighboring state with similar demographics keeps its wage the same, economists can treat this as a "natural experiment" to study the impact of wage increases on employment levels.

overcoming lack of controlled experiments: statistical and econometric modelling

by feeding historical data into software, they can mathematically "hold other variables constant" to estimate the impact of a single factor, such as how a 1% interest rate hike impacts consumer spending.