2. Agenda. What is research?The research process in economicsSurveying the literatureWriting as a tool for economic researchWriting as a product of economic researchCritical readingTheorisingLocating dataManipulating dataEmpirical testingCommunication of results. 3. 1. What is research?. R
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1. 1 Doing Research in Economics Professor Charlie Karlsson
Jönköping International Business School and CESIS
2. 2 Agenda What is research?
The research process in economics
Surveying the literature
Writing as a tool for economic research
Writing as a product of economic research
Communication of results
3. 3 1. What is research? Research is the creation of new valid knowledge, i.e. an extension of the research frontier
Research is based upon the existing up-to-date knowledge in the field
Knowledge is more than data or information – it is structured information
Knowledge is created by constructing a line of arguments
An argument is an assertion or a claim supported by reasons or evidence
4. 4 The construction of knowledge Scholars create knowledge by constructing competing arguments using the following tools:
Mental Processes – thinking about an argument
Oral Discourse – verbalising the argument
Diagram Techniques – illustrating the argument
Mathematic Techniques – manipulating equations to test the logic of the argument
Writing – to present and spread the argument
5. 5 How are arguments evaluated? What are the reasons behind the argument?
Does the argument make sense? Why or why not?
Is the logic flawed?
What are the underlying explicit and implicit assumptions? Are they flawed?
How critical are the assumptions, i.e. would different assumptions lead to different conclusions?
What is the empirical evidence? Does it support the conclusion?
In light of the reasons and evidence provided, is the argument persuasive? If so, the argument is valid until it is invalidated by new arguments.
6. 6 The scientific method Select a scientific problem or question
Apply a theory to derive hypotheses about the problem or question
Test the hypotheses by comparing its predictions to evidence from the real world
If a hypothesis fails the test check the line of arguments and if it is OK reject it
If you can’t reject a hypothesis you complete your line of arguments
7. 7 2. The research process in economics Develop a well defined research question
Survey the literature in the field
Define a clear purpose
Select a theory proper for the research question
Test your hypotheses
Interpret your results and draw conclusions
Communicate your research
8. 8 The objective of a research project is to analyse some aspect of a significant issue or problem
9. 9 Step 1: Defining the scope of the research What is the research topic?
What is the research question?
What is the tentative research hypotheses?
What is the current knowledge, i.e. where goes the research frontier?
What is the purpose?
10. 10 What characterises a good research question? Problem-oriented
Interesting and significant
Amendable to economic analysis
Feasible, given the time and resources available
11. 11 Strategies for selecting research questions (1) Pick a general topic area that interests you, ideally one in which you have some background
Start reading the literature, not merely to see what has been done, but also to identify what research questions remain to be answered or what problems remain to be solved.
12. 12 Strategies for selecting research questions (2) Select a promising from what you have found in the literature:
Could an interesting previous study be applied to a new place or time?
Are there conflicting findings on some question, which you might try to reconcile?
Studies often conclude suggesting questions for future research.
The literature survey may reveal gaps in the current knowledge that you can explore.
13. 13 Step 2: Surveying the literature What is currently known?
What has been discovered to date on a given topic?
Objective: to identify and become familiar with the major studies that have been published on a topic
Start with the most recent publications and work backwards to the roots
14. 14 Step 3. Selecting one theory Based upon your literature survey you must choose one theory, which is relevant for explaining your research problem
Motivate your choice
Never spend time on long presentations of alternative theories – instead give references to literature, where competing theories are presented
15. 15 Step 4: Analysing the problem The theoretical analysis of the research problem, is the process, where theory is applied to shed light on the problem:
What are the essential concepts comprising the problem being analysed?
How are these essential concepts related?
What do these relationships imply?
The result of this analytical process is the research hypothesis (hypotheses).
A research hypothesis is the proposed answer to your research question.
Hypotheses are derived from economic theory (and earlier empirical research)
16. 16 Step 5: Testing your analysis (1) The scientific method in economics is strongly dependent upon empirical testing
Empirical testing implies comparing the predictions of theory, i.e. the hypotheses, with appropriate real-world evidence
You must decide how you will go about to test your hypotheses, i.e. decide your research design, which involves
Finding a good, large and relevant data set, and
Selecting an econometric method
17. 17 Step 5: Testing your analysis (2) Key questions:
How to choose an econometric method, which produce the best possible and most reliable results?
How to adequately test the hypotheses?
Remember that a hypothesis is either rejected or not rejected. It is never accepted!
If you can not reject a hypothesis, then the theoretical proposition is provisionally accepted until it eventually is rejected
18. 18 Step 5: Testing your analysis (3) If a hypothesis is rejected then one must ask the following questions:
Is there something wrong with the theory?
Is there something wrong with the data?
Is there something wrong with the econometric method?
If you find that something is wrong you have to retake the process, otherwise you continue to present your results in the thesis
19. 19 Step 6: Interpreting the results and drawing conclusions (1) What are the results of the empirical testing of the research hypothesis?
Are they consistent with the predictions of theory?
Are they consistent with the results form earlier empirical research?
Are there any problems (multicollinearity, heteroskedasticity, etc.) with the econometric testing that need to be corrected?
20. 20 Step 6: Interpreting the results and drawing conclusions (2) Are there shortcomings with the econometric method that limit or weaken the results?
Given the answers to the above questions: what can be concluded about the results?
To what extent are they in line with the hypotheses?
What can be concluded about your analysis and about your research question more broadly?
21. 21 What is good research? Good research, is research that follows the scientific method, wherever the results lead, even if they reject one or several hypotheses
A research projects that rejects a hypotheses is not failed because it still advances our knowledge – in this case by eliminating one hypothesis as an explanation to the research problem
22. 22 Step 7: Communicating the findings of the research project A written report where the author makes a case for the validity of her/his results based on the logic, rigour and empirical evidence of the research.
Oral presentation (and defence) at the final seminar
Oral presentation at conferences
Publication as a working paper
Publication in a scientific journal (or in an edited book)
23. 23 Writing a research proposal Statement of the nature of the problem
The research question
Survey of the literature
24. 24 3. Surveying the literature Why is a literature survey necessary?
Where to search: popular literature vs scholarly literature vs internet sources
How to search: Developing an effective search strategy
Obtaining the resources
25. 25 Why is a literature survey necessary? To advance the state of knowledge, you need to know what the state of knowledge is
You must create your own sense for what is known and what is not known
The literature provide ideas for your own research
The literature helps you to design your own study by showing how previous approaches either were or were not successful
26. 26 The quality hierarchy Scientific journals with peer review
Edited books with peer review
Monographs published by scientific publishers
27. 27 Where to search? EconLit
Journal of Economic Literature (JEL)
Journal of Economic Perspectives
28. 28 How to search? To locate information efficiently, one needs to use a search strategy
Two general approaches:
29. 29 Browsing Manual examination of written material for useful information or references to useful information
The American Economic Association and JEL use a hierarchical system to classify information in economics: http://www.aeaweb.org/journal/elclasjn.html
30. 30 Keyword Searching Keyword searching use search engines
on the World Wide Web such as Goggle and Google Scholar or
on specialised data bases such as EconLit or Social Science Citation Index (SSCI)
start with the most recent years
Use Boolean searching (AND, OR, NOT) to make your search more precise
31. 31 A basic search strategy Begin by stating your research topic or question
Identify important concepts related to your topic
Brainstorm to create a list of keywords that describe these concepts
Determine which search features may apply
Choose the appropriate database
Read the search instructions for the database
Create a search expression using the appropriate syntax
View the results
Modify the search if necessary
Try the same search with an other data base
32. 32 Obtaining the material More and more journal articles and working papers are available in full-text
Some of them you can reach via EconLit at KTH Library.
You may also test: http://rfe.org
Other resources you may test are www.nber.org http://papers.ssrn.com http://econwpa.wustl.edu
33. 33 REMEMEBER! You need to collect a substantial material to cover the current knowledge and to get ideas for your own research
Think like this: your thesis must contain a list of relevant references at least two pages long, i.e. at least 40 references
34. 34 Scholarly references and citation styles (1) We strongly recommend that you use the parenthetical form for references in the text, for example Lööf (2005)
You may consult
Turubian, K. (1996), Manual for Writers of Term Papers, Theses and Dissertations, 6th ed., for general references and citation and
Harnock, A. & E. Kleppinger, Online: A Reference Guide to Using Internet Sources available at http://www.bedfordstmartins.com/online for citation of online documents
35. 35 Scholarly references and citation styles (2) There are three major schools for referencing and citations:
Modern Language Association (MLA) available at http://www.wisc.edu/writing/Handbook/DocMLA.html
American Psychological Association (APA) available at http://owl.English.purdue.edu/handouts/research/r_apa.html
The Chicago style avilable at http://www.liu.edu/cwis/cwp/library/workshop/citchi.htm
36. 36 4. Using writing as a tool for economic research Writing to learn
Composition as a creative process
The structure of an argument
Examining an argument
Three types of reasoning: deductive, inductive and warrant-based
What makes for a persuasive argument?
An important caveat
37. 37 Writing to learn Economist use writing for two purposes:
Writing as a Product, a form of communication to disseminate research results
Writing as a Process for deriving the research results
Writing forces you to think concretely, i.e. to figure out exactly what you mean.
Writing is a tool of discovery
38. 38 Composition as a creative process (1) The process of writing is called composition, which includes
analysis, i.e. taking something apart to understand it, and
synthesis, i.e. putting pieces together to make a whole
It involves searching for relationships between facts, theories and ideas that make up the raw material for your research
39. 39 Composition as a creative process (2) Composition needs time to develop and to mature
Hence, it is important
to start early
to write a draft
to discuss the main ideas with supervisors and colleagues
to take time off from your writing to allow your sub-conscious to do its job
40. 40 Composition as a creative process (3) Refining a thesis or a paper implies
re-viewing the information
re-thinking the way it is organised
questioning the theoretical framework
questioning the hypotheses
re-constructing the arguments
re-viewing the data
questioning the econometric methods
looking for new patterns of meaning
41. 41 Composition as a creative process (4) Creative and critical writing almost always implies that you have to throw away parts of what you have written
Always concentrate on the most relevant and most important aspects
In Economics, we always disregard aspects of lesser relevance and importance
What you shall provide is a structure, which highlights the most influencing factors in explaining a phenomena but never try to make a catalogue of all factors that may influence a phenomena
42. 42 The structure of the argument (1) The purpose of scholarly writing is to make an argument that is persuasive to experts in the field
When completed, scholarly writing follows a logical, hierarchical structure, in which the main thesis is supported by a series of nested arguments that lead logically to the thesis as a conclusion
43. 43 The structure of the argument (2) The thesis is at the top
It is supported by a number of major reasons
Under each major reason there is a number of supporting arguments
Points that do not lead to the thesis either directly or indirectly shall be omitted
44. 44 What does it mean to say that a conclusion follows from the evidence? An inference is a conclusion reached after reasoning logically about facts and relationships
If the evidence leads us logically to the inference as a conclusion, then we say that the conclusion ”follows”
A logic fallacy is an argument that is flawed because the conclusion does not actually follow from the reasons stated
45. 45 Logical fallacies (1) Straw man – mischaracterizing a position by omitting its strongest reasoning
Special pleading – selectively using the available evidences
Begging the question – making an assertion in which the reason given doesn’t really support the conclusion
Affirming the consequent – drawing conclusions based on unexamined premises
46. 46 Logical fallacies (2) Ad hominem – refuting the argument by attacking the person, rather than his/her arguments
Appeal to authority – accepting an argument because an expert endorses it
Appeal to the people – accepting a position because many others do, without examining the argument
Post hoc, ergo propter hoc – what comes before was the cause
47. 47 Logical fallacies (3) Fallacy of composition – what is true at the micro level must be true at the macro level and vice versa
Appeal to pity – using sympathy for one issue as justification for another issue
False analogy – Drawing parallels between two cases where there are enough substantive differences to question the comparison
48. 48 Examining an argument Identify the major claim
Identify the major evidences
Identify the supporting points
Is there a logical sequence of reasoning?
Are there any logical fallacies?
Does the evidences and the supporting points lead to the claim?
Don’t be afraid to criticise reasoning that isn’t logical and supported by evidence
49. 49 Three types of reasoning (1) Deductive reasoning starts from one or more general principles and derives specific predictions from them
The predictions are deductions
A valid deduction is one which the conclusion must follow from the premises
When scholars in economics theorize, they are typically using deductive reasoning
50. 50 Three types of reasoning (2) An inductive argument is one that reasons in the opposite direction from deduction
Given some specific cases, what can be inferred about the underlying general rule?
The reasoning process follows the same steps as in deduction
The difference is the conclusions: an inductive argument is not a proof, but rather a probalistic inference
When scholars use statistical evidence to test a hypothesis, they are using inductive logic
51. 51 Three types of reasoning (3) Warrant-based reasoning
Warrants are un-stated or underlying assumptions on which an argument stands
Often warrants are higher-order assumptions or axioms that are not testable, e.g. the assumption that consumers maximise utility
The purpose of a warrant is to establish the relevance of the evidence in supporting some claim
52. 52 What makes for a persuasive argument? (1) For an argument to be persuasive, the reasons supporting it must be true, and the conclusions must follow from the reasons
The evidence should be accurate, authorative, precise, clearly explained, complete and representative
53. 53 What makes for a persuasive argument? (2) Factual evidence needs to be accurate – always control that the facts you build your arguments upon are true
Evidence should also be authorative, e.g. data must come from a reliable source
Evidence needs to be precise – try, for example to estimate the size of an effect instead of just claiming that many are affected
Evidence must be clearly explained – it is not enough to just present tables with econometric estimations, they must be explained in writing
54. 54 What makes for a persuasive argument? (3) Evidences need to be complete, i.e. they should have depth and breadth
The evidences presented in your argument should be representative of thought on an assertion, i.e. you shall not only report those evidences, which supports your assertions – with other words you should be intellectually honest
55. 55 An important caveat A conclusion can follow from the evidence, the evidence can be correct, and the argument may still be incorrect
Internal consistency in an argument is a necessary but a sufficient condition, if another conclusion explains the evidence better and more correctly
56. 56 5. Writing as a product of economic analysis What is economic writing?
Writing the first draft
Revising the paper
57. 57 Writing as a product Writing as a product is the report from the research process
The audience is someone other than the author – in your case economists at the master level
Scholarly writing embodies an argument that attempts to persuade experts in the field
The writing needs to be explicit and formal
All important elements needs to be spelled out clearly and in sufficient detail to get your point across
Proper standards of punctuation and grammar must be followed
58. 58 What is economic writing? What fundamentally distinguishes economic from other disciplinary writing and what all types of economic writing share is the use of economic analysis
All economic writing applies economic theory to derive insights about and explain answers to a question or a problem
59. 59 Writing steps Pre-writing or exploration – writing the research proposal (spend relative much time for this step)
Writing the first draft (spend relative less time for this step)
Revising (several times) (spend much time for this step)
Editing (if you apply the writing rules from the very beginning and are careful with details you need relative little time for this step)
60. 60 Writing the first draft Features of good economic writing
Getting the ideas down on paper
Giving credit for intellectual property
61. 61 The first draft One of the hardest steps in completing a paper
Prepare the first draft by writing throughout the research process:
Taking notes as you research the topic
Drafting your own ideas
As a first step define the audience for your paper
62. 62 Features of good economic writing Good writing should be
Focused, i.e. have a clearly defined purpose
Organised, i.e. follow a logical, hierarchical structure
Solidly developed, i.e. major points must be explained in detail and supported by evidence
Clear, concise and precise
Free of grammatical errors
63. 63 Getting the ideas down on paper (1) Focus on getting your basic ideas down on paper
Don’t worry about details, mechanics or grammar at this step
Always take notes about what you have done and where you are going next before you end a work session
Try to get long work sessions, preferably 3-4 hours
64. 64 Getting the ideas down on paper (2) Create an outline of what you are trying to say, i.e. a disposition and a synopsis, OR
do brainstorming, writing down your ideas as they appear and only then create an outline to organise them
Try to find out which approach suits you best
Remember that a research paper should explain what you found, not what you did, i.e. readers are not interested of the steps in the process that you went through writing the paper
65. 65 Giving credit for intellectual property Totally avoid plagiarism, i.e. taking credit for someone else’s words or ideas, even when it’s unintentional
Two types of plagiarism:
Using someone else’s words as if they were your own – thus, if you quote use quotation marks and give proper reference but do not use quotations excessively
Using someone’s unique idea without attribution – thus, be generous with references
66. 66 Revising the paper Every first draft can be improved by revision!
There must be several revisions between the first draft and the final draft
To attain the full potential of the writing process you need start drafting far enough before your deadline to have time to do multiple revisions
67. 67 Is the thesis clear? The purpose of revision is to craft your paper so it better embodies the features of good writing:
Does your paper has a clear focus, i.e. does it only contain one idea or theme?
Is the thesis or principal assertion of the paper clear?
Can you underline the thesis sentence in the paper’s introduction?
Can you underline the corresponding sentence in the paper’s conclusion?
68. 68 Is the paper well organised? (1) Is the organisation logical?
Each chapter, section and paragraph should be the explication of a single thought, idea or theme – if not you should split them up
They should all have a thesis sentence, typically the first sentence
69. 69 Is the paper well organised? (2) It must be possible to identify a ”red thread” throughout the paper, i.e. it must be easy to follow your line of argumentation
You must provide services to the reader by making the theme of each part explicit but also by summarising your arguments at the proper places
70. 70 Are your points supported by evidence? (1) Examine the development of each major point in your paper
Each point is itself an assertion that needs to be supported by evidence
If the first sentence in a chapter, section or paragraph spells out the main point, the reminder should flesh out and support that main point
71. 71 Are your points supported by evidence? (2) Does the main point need to be explained in more detail?
Can you provide examples of what the main point says?
What makes you think that the main point is valid?
What evidence can you provide to bring the reader to that conclusion?
72. 72 Writing style Strive for clarity
Use the active voice
Describe action with a verb
Be precise and concise
Let Microsoft Word help you
Dictionary and thesaurus
73. 73 Strive for clarity Compose each sentence so that the subject is the main actor of the story, and the verb is the main action
Whenever possible use strong verbs over weak ones
Don’t try to express complex ideas that you do not fully understand
Take responsibility for what you write – don’t be vague
74. 74 Use of active voice Passive voice is not incorrect per se, but it makes it harder for the reader to figure out what exactly you are saying
Don’t think that the use of passive voice make your writing sound more objective
The reader needs to know who stands behind the arguments – you should not be afraid of arguing actively
75. 75 Describe action with a verb Academic writers tend to nominalize, i.e. to turn verbs into nouns
However, it makes the writing sound more pretentious and harder to read
Nominalization tends to add words to sentences without adding meaning
To write clearly choose strong verbs to describe the actions in your sentences
76. 76 Be precise and concise Discussing complex issues often requires nuance, i.e. word choice matters, since synonyms have slightly different meanings
Always choose the word that means exactly what you wish to say to achieve precision
Also try to make every point as concisely as you can, i.e. avoid empty words
The quality of a paper never depends upon its length but – a shorter paper making the necessary points is always better than a longer paper
77. 77 Let Microsoft Word help you Go to Tools/Options/Spelling and Grammar and select ”Grammar & style” under Writing style
Under Spelling see to that you don’t ”Hide spelling errors in this document”
Under Grammar see to the you don’t ”Hide grammatical errors in this document”
78. 78 Dictionary and thesaurus If English isn’t your mother tongue you a large, good dictionary
Everyone needs a large and good thesaurus
79. 79 Writing mechanics Use complete sentences
Don’t let sentences run on
80. 80 Use complete sentences Serious writers employ complete sentences
A complete sentence implies a complete thought, while a sentence fragment implies a fragmented or incomplete thought
A sentence fragment is a sentence without a subject or without a verb or a sentence that is incomplete in another way
81. 81 Don’t let sentences run on A run-on sentence is two or more independent clauses that are not separated with the proper punctuation
In a run-on sentence several complete thoughts are jammed together, making it difficult for the reader to determine where one ends and the next begins
82. 82 Proof-reading We naturally assume that every student uses the spell-checking to avoid spelling errors and simple grammatical errors
However, spell-checking is not enough, which implies that you must always leave yourself time to proof-read your final draft very closely.
To perform this task properly requires considerable time and concentration, because proofreading quickly turns into superficial skim-through unless it is done in ‘quality time’ and with academic breaks.
83. 83 6. Critical reading or how to make sense of published research Making sense of published research
Taking research notes and writing abstracts and critical reviews
84. 84 Making sense of published research Understanding format
Evaluating the argument: reading critically
Questions to guide critical reading
Evaluating published research
More questions to guide critical reading
85. 85 Understanding format Economics research papers tend to follow a common format that illustrates the scientific method
In economics, there are three types of scholarly work:
A survey of the work of others
A purely theoretical study
An empirical study
86. 86 The typical empirical research study An introduction
A theoretical analysis of the problem
An empirical test of the hypotheses derived in the theoretical analysis
87. 87 The introduction should
define the general topic and the specific research question
explain the motivation for the research
review the work of previous researchers on the topic, especially
what is lacking in the existing literature, and
how the current study proposes to address that shortcoming
88. 88 The theoretical analysis is the heart of any economics study
is the application of theoretical economic analysis to shed light on the research question
develops the theoretical model used by the study
derives the testable implications or hypotheses of the model
89. 89 The empirical analysis explains how the proposed analysis from the theoretical exercise is tested
states explicitly what results would confirm the theoretical propositions
presents the results obtained from the testing procedures and interprets them
answers the question: To what extent is the theoretical propositions rejected or not
90. 90 The concluding sector explains the insights learned from the research
What answer did economic theory suggest for the research question?
Was this answer rejected or not by the empirical evidence?
How to interpret the results?
What research questions should be given priority in future research?
91. 91 Evaluating the argument: reading critically To understand a research paper you need to read deeply and critically and to understand it’s arguments
This implies that you don’t just read the papers, you study them to discern and evaluate the author’s arguments
To save on time you the first time skim the paper to see whether it is useful
If you find it useful you read it again more carefully
92. 92 Questions to guide critical reading (1) What question is the author asking?
What answer does the author propose (i.e. what are the principal assertions of the study)?
In what way does the study improve upon previous research?
How does the proposed answer compare with those provided by previous research?
93. 93 Questions to guide critical reading (2) What are the major logical or theoretical reasons for the author’s argument?
What empirical evidence does the author provide?
What type of econometric techniques do the author apply?
Are there any problems with the econometric results?
What assumptions are the author making in his her reasoning?
94. 94 Evaluating published research Once you have identified the argument in a published work, the next step is to evaluate the argument, i.e. to assess its validity and reliability
Does the author have an apparent conflict of interest?
Is the study published in a refereed journal?
If not, in what way has the quality of the argument been checked?
95. 95 More questions to guide critical reading Does the theoretical analysis make sense?
Are the data used adequate to the task?
Does the empirical methodology adequately test the hypotheses?
Are the assumptions reasonable?
Is the analysis (theoretical and empirical) clearly explained?
Do the conclusions follow from the evidence presented?
On balance, is the author’s argument convincing to you?
96. 96 REMEMBER! The questions for critical reading are also very useful when you shall prepare the discussion of a paper at a seminar or conference
97. 97 Taking research notes and writing abstracts and critical reviews (1) When you take notes on a reading you read it more carefully
The notes are addressed to yourself and preferably you save them in a computer file
Always record the complete bibliographic information
Make your own copies of complete articles and book chapters that are important to your research project
98. 98 Taking research notes and writing abstracts and critical reviews (2) You can write more formal notes in form of
an abstract (a summary of the author’s arguments), or
a critical review, i.e. an abstract augmented with a critical evaluation of the work
You may also construct an annoted biography, i.e. a list of references that includes a few sentences summarising and critiquing each item
99. 99 7. Theorising or conceptualising the research What does it mean to apply theory to a research topic?
What is theorising?
A commonly used shortcut: modifying an existing model
What makes a good research hypothesis?
100. 100 The development of a theoretical framework is the most abstract part of the research process,
requires both analysis of the research problem and synthesis of an appropriate theoretical framework to explain it, and
requires sufficient knowledge of the appropriate economic theory on which to build
101. 101 What does it mean to apply economic theory to a research topic? Survey the potential economic theories of relevance for your research topic
Assess which of the potential theories that is closest related to your research topic
102. 102 What is theorising? (1) Theorising is the process of brainstorming about an issue so as to identify the logical connections that explain the issue
The result of the process is a theory that analyses the research question, and in particular provides propositions in the form of research hypotheses
Theorising involves constructing a conceptual or theoretical argument
103. 103 What is theorising? (2) When you theorise, you ask three basic questions:
What are the essential concepts involved in the problem being researched?
How are the essential concepts related?
What implications or predictions can be drawn from these relationships?
Notice that there is a distinction between existing economic theory and the resulting theory that is developed for a specific research project
104. 104 Narrative reasoning The creation of a ”primary narrative”, i.e. a document that gives a detailed description of the research topic
”Concept creation”, i.e. a review of the primary narrative so as to identify the essential concepts
The creation of a ”higher order narrative”, i.e. a revised version of the primary narrative that focuses on the concepts developed in step 2
The examination of the rewritten narrative to identify possible relationships between concepts
The postulation of hypotheses from the theoretical relationships
105. 105 Mathematical reasoning Identify the relevant economic assumptions for the problem
Use mathematics to manipulate the assumptions so as to derive a conclusion or hypothesis
Mathematical models can be optimisation models or ad hoc models
106. 106 A commonly used shortcut: modifying an existing model Rarely do economists create entirely original models
Often researchers take an existing model, which has already been applied to the topic they are interested in, and modify it in some way that seems to be an improvement over the original
This can be done both with optimisation and ad hoc models
107. 107 What makes a good research hypothesis? It should be stated clearly and specifically in a way that can’t be misinterpreted
It must be non-trivial
It must be able to discriminate clearly from alternative hypotheses
It must be capable of being proved false
It should be empirically testable
It must be derived from the theoretical analysis
108. 108 8. Locating (and collecting) economic data Data creation
The structure of economic data
Organisations that collect and publish data
Major primary data collections
Major secondary data collections
109. 109 Data and empirical research Data collection and manipulation is a key part of any empirical research project
Start early on to look for potential data sources
Check the data sources used, when you review the literature
BUT, don’t let data availability govern, which variables you include in your theoretical discussion
110. 110 Data creation Don’t view data as facts – the vast majority of data are constructed rather than collected
111. 111 Data construction Steps involved in the construction of data series:
Definition of the concept
Decision on how the concept should be measured
Determination of how to define the sample on which the data is based
Illustrating example: how to measure average family income?
112. 112 Sample data Much social science statistics are based on sample data rather than population data
Thus, the data that are published are extrapolated from samples
Only if the sample is random, and thus truly representative for the population, will the sample statistics correctly measure the population
Therefore, think of much data as estimates rather than facts
113. 113 The structure of economic data It is important to differentiate between those organisations that collect or produce data and those who publish it, i.e. between primary and secondary sources of information
Existing data are typical the result of a specific data collection effort or process
The product of this process is a specific data set that includes a collection of certain variables
114. 114 Characteristics of data sets Time-series data, which are available at different frequencies
Cross-section data, which vary in terms of the unit of analysis
Longitudinal data, i.e. a cross-section data set that is followed over time, is an example of a micro data set
115. 115 Organisations that collect and publish data Central bureaus of statistics, e.g. Statistics Sweden (SCB)
Institutes for economic analysis
Labour market agencies
International organisations, such as UN, IMF, The World Bank, OECD, EU (Eurostat)
116. 116 Major primary data collections National accounts
International financial flows and balances of payment
Imports and exports
Financial company data
117. 117 Major secondary data collections World economic outlook database http://www.imf.org/search97cgi/s97is_eng.dll/search97cgi/inetsrcheng.ini?action=FilterSearch&filter=spquery.hts&Query/Text=weodb
Penn world tables http://datacentre.chass.utotronto.ca/pwt/index.html
Joint BIS-IMF-OECD-World Bank statisitcs http://www.oecd.org/statistics/jointdebt
OECD main economic indicators http://www.oecd.org/statsportal/0,2639,en_2825_293564_1_1_1_1_1,00.html
118. 118 REMEMBER! Always consult your supervisor concerning available data
Never start collecting your own primary data without the permission of your supervisor
119. 119 9. Putting together your data set Developing a search strategy for finding your data
120. 120 Developing a search strategy for finding your data Step 1: Before you search
What are the desired variables?
How should each variable be defined?
What data frequency and sample period or what levels of analysis?
What are the potential sources for data on each variable?
Step 2. As you search
What data are available?
Are there suitable proxy variables for variables that are unavailable?
If not, how can the empirical model be modified to use the data available but still test the hypotheses?
121. 121 Data manipulation Level of variable
Change in variable
Real versus nominal magnitudes
Quantity indices versus real quantities
Price indices versus implicit price deflators
How inflation distorts nominal values
Rebasing data series
Constructing a data appendix
122. 122 Different forms of data Levels
Rates of change/percentage change (or growth rates)
Annualised growth rates
Nominal, i.e. running prices
Real, i.e. fixed prices
Index numbers for prices and quantities
123. 123 10. A first look at empirical testing: creating a valid research design Key issues in research design
How does one analyse data?
Random variation in human behaviour
Simple statistical hypothesis testing
124. 124 Key issues of research design Two general types of empirical methods:
Survey or non-experimental methods (the traditional method in economics)
A critical factor in designing an empirical study is the degree to which the method is valid
125. 125 Validity A study has internal validity if the impact observed can be attributed to the study variable:
Instrument validity – does the test instrument adequately measure what it purports to?
Relationship validity – how conclusive is the empirical testing?
Casual validity – can one be sure that the hypothesised causal relationship is valid?
A study has external validly if the results can be generalised to other situations, applications or circumstances
126. 126 Empirical testing (1) Purpose: to search for evidence in the data to evaluate the hypotheses
A good empirical test rejects alternative hypotheses
However, the data in the real world may be consistent with alternative hypotheses
Thus, you must select an empirical test that adequately discriminates between alternative hypotheses
127. 127 Empirical testing (2) The power of a test is the probability of correctly rejection the null hypothesis when it is not true
When selecting a test method always ask: ”If the test yields the strongest possible statistical results, how confident can I be that my hypothesis is not rejected?”
If the test does not adequately discriminate between alternative hypotheses, you should consider a more powerful test
128. 128 How does one analyse data? Thinking about empirical testing
129. 129 Thinking about empirical testing (1) Start by asking the following questions:
What are the implications (or predictions) of my theoretical analysis?
If the hypothesis is not rejected, what evidence should one expect to see?
The answer to these questions is called the theoretical prediction of the analysis
130. 130 Thinking about empirical testing (2) Once the predictions of the theory are identified, the researcher next ask:
Is the evidence of the real world consistent with these predictions?
How exactly does one examine the evidence to answer this question?
We can here differentiate between three methods:
Simple hypothesis testing
Multiple regression analysis
131. 131 Casual empiricism This is the type of analysis you do when you present your data and it includes
Simple descriptive statistics
132. 132 Descriptive statistics Measures of central tendency are averages:
Mode, i.e. the most common value in the sample
Measures of dispersion:
Range, i.e. maximum and minimum values in the data
Measures of relationships between variables:
133. 133 Major problems in data analysis The effects of random variation in human behaviour
The fact that relationships between two variables can be concealed by the effects of other variables
The fact that correlation is not the same as causation
134. 134 Random variation in human behaviour This poses a problem for relationship validity because the effects of random variation can obscure any underlying relationship
With large random samples the positive and negative errors tend to cancel each other
However, truly random samples are rare, which introduce bias into the results as almost any data sample will include a non-random selection of errors due to sampling errors
135. 135 Statistical methods The way to deal with random variation in human behaviour is to incorporate statistical methods to determine the likelihood of a sampling error
When employing statistical methods it is critical to discriminate between two concepts:
The null hypothesis or the statistical hypothesis
The maintained hypothesis, i.e. the theoretical prediction of a model
Economists generally test the null hypothesis
136. 136 Level of significance (1) How certain do you need to be to reject the null hypothesis?
The level of significance is the risk that the researcher is willing to take that the null hypothesis will be rejected when it is true or alternatively the probability that the researcher will not reject the maintained hypothesis when it should be rejected
137. 137 Level of significance (2) Two schools:
Select one level of significance, normally the 5 % level
Mark the different levels of significance, i.e. 10 %, 5 %, 1 %
138. 138 Simple statistical hypothesis testing Simple statistical hypothesis testing is one case of what is known more generally as statistical hypothesis testing
If you are uncertain consult your textbooks on statistics and econometrics on t-tests and the use of p-values
139. 139 Confounding variables Confounding of explanatory variables, i.e. the fact that relationships between two variables can be concealed by the effects of other variables
It affects both casual empiricism and simple t-tests
The general solution to this problem is provided by multiple regression, which offers an opportunity to control for other variables that could influence that studied variable
140. 140 Casual validity Correlation between two variables does not necessarily imply causation
Regression analysis does not prove causation
Theory can help you make a case for causation
However, be observant for the endogenously problem, i.e. that causation may go both ways
141. 141 11. Introduction to regression analysis The 6 steps of regression analysis
142. 142 Steps in regression analysis (1) Step 1: State the hypothesis
Step 2: Choose a proper mathematic model and motivate your choice
Step 3: Test the hypothesis
Choose an estimation method and motivate your choice
Estimate the model
143. 143 Steps in regression analysis (2) Step 4: Interpret the test results
To what extent do the parameter estimates conform to the maintained hypothesis identified in Step 1?
Are the parameter estimates statistically significant?
Are they economically significant?
Are the parameter estimates
plausible for the real world?
consistent with economic theory?
within the range of previous estimates?
How ”good a fit” is the overall regression model?
144. 144 Steps in regression analysis (3) Step 5: Check for and correct common problems of regression analysis
Step 6: Evaluate the test results
To what extent are the results in line with the hypotheses?
Can you go on to analyse and present your results or do you need to retake the process?
145. 145 Step 1: State the hypotheses Identify your dependent variable and your explanatory or independent variable
State clearly the sign (positive or negative) of the expected influence of each of the independent variables on the dependent variable
146. 146 Step 2: Choose a proper mathematical model There are numerous mathematical models used in regression analysis
You have to choose one model dependent upon your expectations about the relationship between the independent variables and the dependent variable and between the independent variables
You must motivate your choice
147. 147 Step 3. Test the hypothesis Choose an estimation technique – you can not always rely on OLS!
Motivate your choice – the validity of each estimation method depends upon a number of technical assumptions hold true
Estimate the relationship
Sometimes it is necessary to test alternative model formulations or alternative models or to use alternative estimation methods
148. 148 Step 4: Interpret the test results (1) To what extent do the parameter estimates conform to the maintained hypothesis?
Are the parameter estimates statistically different from zero, i.e. are they statistically significant?
Are the signs the expected signs?
Are the size of the parameter estimates in the expected range?
149. 149 Step 4: Interpret the test results (2) Has the results economic significance, i.e. are the size of effects of such magnitude that they matter?
150. 150 Step 4: Interpret the test results (3) Are the parameter estimates plausible?
What are the units of the parameter estimates?
Given the units, are the parameter estimates plausible?
Check the size of the elasticities!
Are the parameter estimates reasonable stable between different model formulations?
Are the results consistent with economic theory?
How do the estimates compare with previous research?
151. 151 Step 4: Interpret the test results (4) How ”good a fit” is the regression model?
There are several test statistics:
Don’t overestimate the importance of a high R-square in hypothesis testing
However, a low R-square may be an indication of missing explanatory variables
R-square is normally lower for cross-section data than for time series data
152. 152 Step 5: Check for and if necessary correct for common problems of regression analysis Problem 1: autocorrelation (and spatial autocorrelation)
Problem 2: heteroskedasticity
Problem 3: simultaneous equations bias
Problem 4: specification error
Problem 5: multicolliniarity
Always consult your textbooks in econometrics at this stage!
153. 153 Step 6: Evaluate the test results This is the main point
What do the results mean with respect to my hypotheses?
Interpreting regression results is more an art that a science
154. 154 Some additions Transformation of data – natural logarithms
Non-linear relationships – squared terms
Inclusion of time trends
Qualititative or limited dependent variables – logit models, tobit models, etc.
155. 155 12 Communicating the results of a research project Writing the research report
Presenting research orally
156. 156 Writing the research report Introduction
The written literature review
Writing the literature review
Empirical testing of the analysis
Other components of the paper
157. 157 The purpose of a written report The purpose of a written report
is to present the results of your research, but
more importantly to provide a persuasive argument to readers of what you have found
You must think of both format and argument
Always remember that the purpose of research is to advance knowledge in a field by providing convincing arguments supported by logic and empirical evidence
158. 158 Components of an empirical research paper in economics Title
Table of contents
Acknowledgements (not necessary)
Introduction and literature survey
List of references
Data and other appendices
159. 159 Introduction (1) The purpose of the introduction is to provide a rationale for the research
What is the nature of the issue or problem the research investigates?
Why is it worthy an investigation?
What have previous researchers discovered about the issue or problem?
What is the purpose with your research, i.e. what is the contribution that your research will make to the literature?
160. 160 Introduction (2) The introduction is the most critical part of the research report
You must design the first part of the introduction so that it catches the readers interest
You may present some dramatic statistical figures or you may start by questioning some recent research
Avoid to start the introduction in a ”traditional” manner
161. 161 Introduction (3) Start the introduction by sketching out the research problem.
What evidence can you offer to describe the issue?
Why is it a problem?
Is it a public policy issue, a social problem?
Is it purely an intellectual puzzle?
Who would be interested of the problem?
162. 162 Introduction (4) Explain to the reader why the topic is interesting, significant and substantial.
Is it, for example a hot topic among experts in the field, among politicians, in industry, etc.
Show that there are some aspects of the problem that have yet not been understood
Next step: summarise what has been done already to study the problem
163. 163 The written literature review (1) The literature survey is usually included as a part of the introduction but can in rare cases be a separate chapter
164. 164 The written literature review (2) The literature review shall accomplish three things:
It should identify the major findings on a topic up to the present with a concentration on the most recent contributions to the knowledge in the field
It should point out the principal deficiencies of these studies and/or provide a sense of what is lacking in the literature
It should conclude by leading into your research question, by explaining how your research proposes to contribute to the literature or address some shortcomings of earlier studies
165. 165 Writing the literature review (1) Novice researchers tend to write excessively long literature surveys
The literature survey should be brief but cover the major contributions
The trick is to cast your net wide enough
What number of sources to consult depends on the number of studies completed in the field
166. 166 Writing the literature review (2) For each study you include you shall
Give complete citation information – ”Johansson (2002)”
Indicate the question that the author examined
The author’s findings
Anything about the methodology relevant for your study
Sometimes it is enough with one sentence for one reference
167. 167 Theoretical analysis (1) The purpose is to present the theoretical analysis of the issue or the problem that you are studying
This section presents the logical evidence as a deductive argument
You must clearly
describe the theory you are applying to your research problem
explain in detail why it is relevant, and then
sketch out how it diagnoses the problem
168. 168 Theoretical analysis (2) As you sketch out the logic of your theoretical analysis it is helpful to remember that you are trying to develop a deductive argument that culminates in the research hypothesis(es), which are contained in the form of an equation of the model
Remember that you need to do a complete job of explaining your theoretical analysis – the theoretical analysis is more important than you think!
169. 169 Empirical testing of the model This chapter must contain
A presentation of the data and where it comes from
The empirical model, its motivation and the hypothesized results
The econometric testing methodology and its motivation
Actual results with the proper statistical indicators
A description of how you have dealt with common econometric problems
Interpretation and analysis of the results
170. 170 Conclusions (1) The purpose of this part is to summarise your findings, i.e. to restate your arguments and conclude whether your hypotheses were rejected or not
In light of the statistical results, what can you infer about your hypothesis(es)?
To what extent are the empirical results in line with the theoretical expectations
171. 171 Conclusions (2) If your hypotheses are rejected you must suggest reasons why
Something flawed with the theory?
Something flawed with the data?
Something flawed with the econometric techniques?
172. 172 Conclusions (3) What can be concluded about the research question more broadly?
Are there any policy conclusions that can be drawn?
What research questions should be taken up in future research?
173. 173 Other components of the paper Title should be carefully composed
You must include an abstract (together with 5-8 key-words and relevant JEL-codes)
What was the research problem?
How have you dealt with it?
What is your results?
Table of contents
Reference list (complete and with all necessary details)
174. 174 Presenting research orally An oral presentation is different from a written one
Preparing the presentation
Using visual aids: handouts, transparencies, PowerPoint
Practicing the presentation
Giving the presentation
The role of the discussant
175. 175 The seminar The purpose of the seminar is to
present the research work to a larger audience,
provide time for criticism of the research work to make it possible to improve it and for a scientific dialogue
All participants are expected to be active in the discussion at the seminar
176. 176 An oral presentation is different from a written one You will not be able to present all your material – you must a selection of the most strategic parts, i.e. the presentation shall summarise the major points of your research paper
The research problem in relation to earlier research
Your theoretical analysis and in particular your hypotheses
Your econometric technique
Your major results
Your major conclusions
177. 177 Preparing the presentation (1) Remember that your presentation shall highlight what is new with your research
Prepare presentation ”notes”, i.e. put down on paper the points you want to make
NEVER READ FROM YOUR NOTES WHEN YOU MAKE YOUR PRESENTATION – BUT DON’T FULLY MEMORISE THEM EITHER!
You are supposed to ”talk about” your research, i.e. you need to know the material but you don’t need to know every world
178. 178 Preparing the presentation (2) When you prepare your presentation, you should explicitly and carefully think about its introduction.
How can you engage the interest of the audience?
Do a careful time planning and allocate extra time to discuss the principal contributions of your research
Also, think explicitly upon how you shall end the presentation
179. 179 Use of visual aids Making presentations of research reports needs some visual aids, at least to show figures, diagrams, tables, equations, etc
You can use handouts, transparencies or PowerPoint – each technique has its advantages and disadvantages
180. 180 Practicing the presentation Always practice a few times before you make the presentation so you know what time it takes and if there is some flaws with your presentation structure
Remember that the presentation takes much less time when you rehearse on your own
181. 181 Giving the presentation Dress professionally for your presentation
Bring a few extra copies of your paper
Arrive in time so that you can make the necessary technical preparations
Stand up to get better contact with the audience
Start by introducing yourself
Think about your body language
Avoid filler words like umm, aah, and so on
Don’t exceed the time limit - it is unprofessional
End your presentation with a thank you
Be prepared for questions
182. 182 The role of the discussant (1) A two-fold role:
To offer a well-thought-out, educated reaction to the paper
To give the author creative feed-bask on how to improve the paper
Always read the paper carefully and prepare your comments
Never by rude but be frank about the less satisfactory aspects of the paper
Never start with saying that this was a very good paper – in particular not if it isn’t true
183. 183 The role of the discussant (2) Start by briefly summarising the paper and highlight the contribution it attempts to make to the literature
What does the paper try to accomplish?
How does it go about doing it?
What results are reported?
To what extent did the paper succeed in reaching its goal?
184. 184 The role of the discussant (3) What can you suggest to improve the paper?
Could any parts benefit from more detailed explanation?
Are there parts that you are unable to understand?
Are there any problems with the data that weakened the paper’s argument?
Are there any problems with the econometric techniques and the statistical tests employed?
Are there any errors in interpreting the results?
Are there any previous studies that the author might benefit from reading?
185. 185 The role of the discussant (4) Specific suggestions are always more helpful than general comments
The content of the paper is more important than the writing but technical details and language deficiencies matter to the extent that they detracts from the argument
End with summarising what contribution the paper makes to understanding the issue or problem it seeks to explore
Give a copy of your comments to the author and also the paper if you have annoted it