Ch. 2: The Scientific Method Flashcards
The scientific method
The ongoing process that economists, other social scientists, and natural scientists use to:
1) Develop models of the world
2) Evaluate those models by testing them with data
Empirical evidence/data
Facts that are obtained through observation and measurement.]
Data: Facts measurements or statistics that describe the real world
Hypothesis
Predictions (typically generated by a model) that can be tested by data
Causation
Occurs when one thing directly affects another
Cause and effect
Ex: Turning on the stove causes the water in the kettle to boil
Correlation
Two variables tend to change at the same time—as one variable changes, the other changes as well.
There is some kind of connection. It might be cause and effect, but correlation can also arise when causation is not present
Mutual relationship between two variables.
Ex: Students who take music classes score better on their SATs than students who do not take music classes
Ex: Students who spend more time studying get better grades than those who spend less. = the correlation of studying with grades.
Variable
Factor that is likely to change or vary
It may or may not change with other variables.
It may not need to measured accurately if its influence is large enough.
It may be easily measured, and could change more that one variable.
Positive correlation
Two variables tend to move in the same direction
Ex: Surveys reveal that people who have a relatively high income are more likely to be married than people who have a relatively low income
Negative correlation
Implies that the two variables tend to move in opposite directions
Ex: People with a high level of education are less likely to be unemployed.
Zero correlation
Two variables are not related
Ex: The number of friends you have likely has no relation to whether your address is on the odd or even side of the street
Omitted Variable
Something that has been left out of a study that, if included, would explain why two variables are correlated
Ex: The arrival of the Christmas season causes both the store’s ads to be red and month-over-month sales revenue to rise. Thus, the Christmas season is an omitted variable that explains why red ads tend to occur at around the time that sales tend to rise.
Reverse Causality
Occurs when we mix up the direction of cause and effect.
Ex: Relatively wealthy people tend to be relatively healthy. Healthy people tend to be wealthy since they save money
Experiment
A controlled method of investigating causal relationships among variables
Randomization
The assignment of subjects by chance, rather than by choice, to a treatment group or to a control group.
Natural Experiment
An empirical study in which some process—out of the control of the experimenter—has assigned subjects to control and treatment groups in a random or nearly random way.
Uses historical data to test a theory using a random process not controlled by an individual.
Does not allow variables to be controlled by the experimenter.
Data
Facts, measurements, or statistics used to describe something specific
