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1-4 Tools Economist Use

1-4 Tools Economist Use. Mr. Kusmits. Scientific Method (Economic is a Social Science). Pose a question Research the question Hypothesis Collect data Evaluate the hypothesis. Natural Experiments. Economist do not have labs – cannot conduct experiments Must use natural experiments

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1-4 Tools Economist Use

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  1. 1-4 Tools Economist Use Mr. Kusmits

  2. Scientific Method(Economic is a Social Science) • Pose a question • Research the question • Hypothesis • Collect data • Evaluate the hypothesis

  3. Natural Experiments • Economist do not have labs – cannot conduct experiments • Must use natural experiments • 1974 and 1995 speed limit changes • NOTICE– economist focus on cost and savings--- not safety alone

  4. 2D in a 3D world

  5. 2D in a 3D World Cont. • Really graphs show statistics • Well… I know this guy he has a million dollars and dropped out of school • Graphs show correlation NOT causation • Correlation shows a connection (what is typical) • GRAPHS CAN NOT SHOW ALL VARIABLES

  6. Models • Economic Model • Measure of effects one variable at a time • Useful for both predicting future and explaining past events • Rational-behavior model • People base decisions on reason- behaving in ways that serve own wants

  7. All Things Equal • Change one thing at a time when faced with many (not missing) factors. • This is possible with known factors with statistics

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