Chapter 2 Flashcards
What is the scientific method?
The scientific method is the name for the ongoing process that economists and other scientists use to develop model of the world and test those models with data.
What is a model?
A model is a simplified description, or representation of the world. Sometimes economists refer to a model as a theory. These terms are often interchangeable.
What is empirical evidence?
Empirical evidence is a set of facts established by observation and measurement.
What are hypotheses?
Hypotheses are predictions (typically generated by a model) that can be tested with data.
What is the mean (or average)?
The mean, or average, is the sum of all the different values divided by the number of values.
What is causation?
Causation occurs when one thing directly affects another through a cause-and-affect relationship. Think of causation of the path from cause to affect.
What is correlation?
A correlation means that there is a mutual relationship between the two things.
What is a variable?
A variable is a factor which is likely to change or vary.
What is a positive correlation?
Positive correlation implies that the two variables tend to move in the same direction.
What is negative correlation?
Negative correlation implies that the variables tend to move in opposite directions.
What is an omitted variable?
An omitted variable is something which has been left out of a study that, if included, would explain why two variables that are in the study are correlated.
What is reverse causality?
Reverse causality occurs when we mix up the direction of the cause and the the effect.
What is an experiment?
An experiment is a controlled method of investigating casual relationships among variables.
What is randomisation?
Randomisation is the assignment of subjects by chance, rather than by choice, to a treatment group or controlled group.
What is a natural experiment?
A natural experiment is 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 o nearly random way.
