The Scientific Method

1. The Scientific Method

2. Necessary & Sufficient Conditions • A is said to be a sufficient condition for B. If A happens B will be guaranteed to occur. • EX: Ceteris Paribus, if it rains then the football field will be wet. Necessary & Sufficient Conditions.

3. Testing Causality • If A is observed and ceteris paribus B does not occur then the idea that A causes B is called into question. • EX: Theory: C.P. Price is negatively related to quantity demanded. • We observe price falling and ceteris paribus quantity demanded also falls. Does the data support the theory?

4. Testing Causality • Econometrically we can estimate an equation for demand. • Q = f(Price, Income, Other Variables) • What is the predicted sign on the coefficient of price? (Is it significant?)

5. Fallacies • Denying the antecedent: It did not rain therefore the football field cannot be wet (How about a sprinkler system?) • Affirming the consequent: The field is wet therefore it must have rained. (Sprinklers may have been on)

6. Contrapositive • The only logical equivalent to A=> B is the contrapositive statement ~B => ~A. • EX1: If it rains then the field will be wet. (Contrapositive) The field is dry therefore it did not rain. • EX2: If cigarettes are addictive then past consumption influences present consumption. (Contrapositive) If past consumption does not influence present consumption then cigarettes are not addictive.