SCIENTIFIC METHODOLOGY OF ECONOMICS
Methodology refers to the steps taken to arrive at some conclusions. One objective of economics is to come out with theories. Theories are generalized statement representing things that happen to us in the specific way.
The two methods used are the INDUCTIVE and the DEDUCTIVE methods
- INDUCTIVE METHODS:
it is a method of reasoning that proceeds from studies made on particular cases to general conclusion i.e. we study individual units, hypothesis and draw general conclusions on similar cases. It moves from particular to general e.g. suppose that the prize of beer rises sharply, causing many people to drink less then we may conclude that the price of any commodity tend to reduce the demand for it.
2. DEDUCTIVE METHOD:
This is a method of reasoning that proceeds through logical reasoning and move from general to particular e.g. a fall in demand for beer may have been caused by loss of appetite.
POSITIVE AND NORMATIVE STATEMENT
- POSITIVE STATEMENT:
positive statements deal only with facts which must be true or false. It seeks objectives or scientific explanation of the works of an economic statement e.g. I am a boy; this is a pencil.
2. NORMATIVE STATEMENT:
Normative statement on the other hand care valued judgment or people’s opinion. It deals with what ought to be. E.g. politician decides if policies matter and economist acts as aducers on the economic effect of some policies proposed. E.g. we ought to build more roads, we should reduce the prize of petrol in our local markets.