Economics as a Social Science Flashcards
What is the purpose of theoretical models
To explain economic phenomena
What is the value of theoretical models
To simplify complex economic phenomena
What is the value of empirical models
To predict economic phenomena
What are empirical concepts
Concepts driven by data
What are theoretical concepts
Concepts driven by ideas
What are theoretical models based on
Based on theory
What are empirical models based on
Based on economic data
What is the purpose of empirical models
To predict economic phenomena
Why do economists develop models
To explain and predict economic phenomena
Ceteris Paribus
a Latin phrase that means “all other things held constant”, used in economics to ensure that all other variables are held constant
Behavioural economics
A method of economic analysis that uses psychology to explain how economic agents make choices and decisions
unintended consequences
outcomes that are not the ones foreseen and intended by a purposeful action
For example, government intervention in markets creates at least one unintended consequences due to economics being a social science and we cannot predict accurately how producers and consumers will react
