Methodological Concepts and
Perspectives
Lecture 3
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Organization of this lecture
Concepts & Perspective in Methodology:
• Defining science
• Considering knowledge
• Classification of types of knowledge
• Role of personal objectivity
• Role of facts, theory and hypothesis
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Science
• Science is the organized accumulation of
systematic [reliable] knowledge for the
purpose of intelligent explanation/prediction
(Williams, 1984)
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• Science is systematic inquiry -- it is not a static
or unchanging entity.
• Its intended purpose is explanation / prediction ;
science is especially concerned with conditional
prediction
ie. “if X, Y, and Z occur, W will follow”
• Research and Science are mutually
interdependent
– Science is accumulated, reliable knowledge
– Research is a process through which science is
expanded and tested for validity
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• Science does not consist of “factual truth”,
devoid of human values or personal views.
• Science is inherently a social enterprise and
scientific knowledge is shaped by human
values, limitations, and social contexts
• Personal beliefs can affect scientific judgment
and people are fallible.
• Scientists should not blindly accept (or reject)
ideas, observations or concepts
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Economics as Art and Science
(Is Economics a Science?)
• Economics is a science because it accumulates
(reliable?) knowledge through systematic
inquiry
• It is also is an art which applies knowledge to
current issues and problems.
• Good economic research requires intuition,
creativity, and worldly experience
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Physical vs Social Science
• Social science places heavy emphasis on
development and use of theories
• Physical sciences generate data under controlled
conditions to test their theories – postulated
relationships between physical forces , verified
through experimental design and data
generation.
• Theories in social science tend to address more
complex phenomenon of individual and group
motivation and behavior, and effects on societal
institutions. (Often can’t be directly observed or
quantified under controlled conditions.)
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Knowledge
(How do we “know” what we know?)
• Postivistic vs. Normativistic
Knowledge (Johnson, 1986)
• Private vs. Public Knowledge
(Larrabee, 1964)
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Positivistic vs. Normativistic
Knowledge
• Positivisitic – knowledge of conditions, or
things that are directly observable or
measurable
• Normativistic – knowledge about values
– prescriptive knowledge – what ought or ought not
to be done to solve a problem. Inherently
embodies judgement
– knowledge of values – the goodness and badness
of conditions and situations (not observable)
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Private vs. Public Knowledge
(another way to classify knowledge)
• Public knowledge can be demonstrated to others
through logic and/or evidence. It is reliable
knowledge and is shared publically.
• Private knowledge is that which we know ourselves
but cannot be demonstrated to others. eg. religious
beliefs, “faith”
• Private knowledge can lead to public knowledge if
we set to demonstrate its reliability
• Only public knowledge can be reliable in a scientific
sense, but what is accepted as public knowledge can
be culturally and time dependent
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Ways We Obtain Knowledge
• Six primary means:
the senses, experience, intuition,
revelation, measurement, and reasoning
• All ways of “knowing” can be placed in
one of these categories, or some
combination.
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The Senses
• Knowledge through sight, sound, touch, taste
and smell
• These are generally privately perceived and
help in forming the basis for each of the other
avenues to knowledge, except reasoning
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Experience
• The accumulated total of one’s exposure to
and interaction with people, places, things,
circumstances, ideas, senses etc..
• Experience knowledge is a disorderly and
unorganized means of learning, however, it is
an essential component of making sense of
knowledge we possess.
• We use our experience to evaluate new
knowledge in its relation to prior knowledge
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Intuition
• Sensing or feeling of something being accurate
or not
• Inherently private knowledge
• However, this might lead to an orderly
exploration and logical development which
can lead to public knowledge
• Intuition can be important for the creative
research process, but cant be accepted as
reliable on its own.
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Revelation
• The reception of knowledge from an
undefined or unknown source
• Not confined to divine revelation; something
can just “occur to us”… “out of the blue”
• Not a reliable source of knowledge, unless it is
tested for reliability
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Measurement
• Knowledge gained through measurement
(quantification) such as data.
• Its connection to senses and experience is
obvious
• It is generally considered factual knowledge
and reliable, with understanding of sampling
or measurement error
• Economic research involves a lot of statistical
sampling and data gathering
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Reasoning
• The final means of gaining knowledge -- also
thought of as “interpretation”. Integrates the
other ways
• Knowledge gained through reasoning is the only
way to derive reliable knowledge of
relationships and patterns ,through which we
develop explanatory or predictive capability
• Reasoning is the main avenue to useful
disciplinary, subject-matter, and problemsolving knowledge
• Reasoning can be deductive, inductive, or both.
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Reliability of (Public) Knowledge
Two criteria for establishing reliability of
knowledge:
1. Supported by evidence (quantitative data or
complex logical constructions). This should
be measureable
2. The way the evidence is obtained or
generated can be demonstrated or
reproduced
The reliability of things that cannot be directly
observed, is through reasoning and logic.
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Two Types of Logic
(Deductive and Inductive)
Deductive logic
• The process of reasoning from general
premises (e.g. assumptions) to specific results
or conclusions. Economic theory is largely
based on deductive logic.
• We establish a series of assumptions about
conditions, motivations and behaviors, and
logically work through to variables and
parameters we wish to explain or predict.
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Inductive Logic
• Is reasoning from the specific circumstances or
outcomes to a conclusion about general
circumstances or outcomes
• It is an empirical process of reaching a conclusion
or arriving at new principles from known data
and experience by observing objective realities.
• The most applicable explanation of induction
from economics is statistical inference
– Collect data from a sample using established
standards and criteria to infer characteristics and
behavior of the entire population
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Logical Fallacies
• Errors in reasoning, which can lead to errors in
conclusions or unreliable information
• List of logical fallacies
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Special pleading (selective use of information)
Affirming the consequent (validity of premises??)
Attacking the person (person representing issue)
Appeal to the people (majority “rules”)
Appeal to authority (“X” says its so)
False cause (attributing wrong cause to an effect)
Argument by analogy (analogous cases act the same)
Composition and division (true for part, true for whole,
and vice versa)
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Tests for Reliability
Besides avoiding logical fallacies, more
comprehensive guidelines are needed
Four tests are recognized:
• logical coherence,
• correspondence
• clarity (comprehensiveness)
• the pragmatic test of workability
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Test of Logical Coherence
• Examining an outcome or proposition to see if
it is free of logical contradiction (errors and
fallacies)
• Meeting the test of logical coherence does not
ensure the reliability of the outcome but its
reliability fails if the test is not met
• When applied to theory, it is a test of whether
the conclusions follow logically from the
assumptions.
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Test of Correspondence
• Comparing an outcome or statement to what
is already ‘known’ to see if it is consistent with
prior knowledge.
• When applied to theory, it examines whether
conclusions are supported by empirical
evidence.
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Test of Clarity
• Examines the outcome or proposition for lack
of ambiguity or vagueness.
• If more than one meaning, it fails the test
• Use of a concept in which terms used are not
well defined so the meanings are vague
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Test of Workability (Pragmatism)
• The results have to solve the problem or issue addressed.
• The results must work, be relevant, and be reliable
EXAMPLE:
PHYSICIAN GIVING A CHILD A SMALLPOX VACCINATION.
• Correspondence – yes – it has worked before, but for child no
(lack prior knowledge)
• Coherence – yes for doctor but not for child
• Clarity – yes for doctor and not for child
• Workability – did it work for the child?
• If these tests are met, the knowledge can be considered
tentatively reliable, subject to further tests.
• We must consider all of the relevant evidence when evaluating
reliability of knowledge
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Role of Personal Objectivity
• Fundamental to reliable knowledge
• Avoid trying to impose our private values and
beliefs on others
• Subjectivity is associated with beliefs, values
and opinion. Reliable public knowledge cannot
be derived from personal subjective positions.
• Objectivity relies on what is demonstrable by
observation, measurement, and logic.
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• Objectivity is the cornerstone of science and
reliable knowledge.
• However, no scientist is completely objective.
All introduce some subjectivity in our work,
even by deciding what issues to study.
• Strive for scientific neutrality, by avoiding
personal values influencing research. Be open
to any research outcome.
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Scientific Prediction
• Scientific prediction involves theory used in
conjunction with empirical (experimental)
knowledge and experience.
• It involves the interaction of the following
terms:
 Fact – a verifiable observation
 Theory – logical relationships among facts
 Hypothesis – a testable proposition
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Facts
• Observations that we establish through sense
or measurement
• Facts are positive (directly observable or
measureable) and independent of personal
judgment
• Facts are not necessarily “permanent”
• They are not by themselves used for
prediction
• Facts and values need to be differentiated,
but there can be facts about values
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Theory
• Theories establish relationships, using deductive
logic and facts as building blocks
• A theory is not unfounded speculation, as in the
popular phrase “that may be true in theory, but
…” This is wrong!
• Theories are used for predictive and explanatory
purposes
• Theories are tested by their internal logic
• Theories are abstractions, simplifications, and/or
generalizations
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Functions of Theory in Economic Research
• Orientation – framework to establish a
problem or queston
• Classification – defined meanings that
facilitate understanding of complex concepts
• Conceptualization – visualizing how something
works or suggesting causes and effects
• Summarization
– Empirical generalization
– Generalized relationships
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Functions of Theory … cont.
• Provision of precision – help to relate facts
and concepts
• Prediction of facts or identification of
hypotheses
• Identification of gaps in our knowledge
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Hypothesis
• A result or outcome that is not yet evaluated
or tested
• It is a tentative assertion of a relationship
between factors or events that is subject to
verification
eg. Statistical hypothesis testing in econometrics:
1) significance of individual parameters
2) statistical fit of the entire model
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Hypothesis … cont.
Three categories of hypotheses:
1. Maintained hypotheses – things assumed
true for the purposes of a study
2. Diagnostic hypotheses – propositions about
the cause of a problem
3. Remedial hypotheses – proposed solutions to
problems
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