Research Methodology in Economics

Research methodology in economics applies the scientific method to the most quantitative of the social sciences. Economists use complex mathematical and statistical techniques to analyze economic research questions and rely on empirical evidence to support economic theories. The theories with the strongest empirical support stand the test of time.

Identification

Research methodology in economics means using the scientific method to investigate and analyze economic phenomena. Research adds to the body of knowledge in economics and other disciplines. An appropriate research methodology starts with a problem or question, then constructs an argument that stakes a position or articulates a point of view.

Early Steps

Economic research methodology starts with developing an effective research question. To do this, a researcher looks at a general topic, then examines the economic research literature, usually in peer-reviewed economics journals, to find out what has been done in this area. While examining the literature, economists pay particular attention to unanswered questions or contradictions in what they find. Gaps or competing arguments in previous studies often give economists their own research questions to investigate.

Data Collection and Analysis

After stating a research question, economists then decide on a method of data collection and analysis. Economists often use complex mathematical equations, involving in-depth statistical data, to study economic questions. For example, an economist may be interested in the effects of capital gains taxes on trading in the financial markets. Such a question would involve analysis of extensive data sets, perhaps from the U.S. Securities and Exchange Commission, which regulates the financial markets.

Favored analytical techniques among economists include descriptive statistics, regression analysis and forecasting. The latter uses advanced statistical techniques to predict future economic conditions.

Conclusions

Following data analysis, economists restate their research question, then present their findings and conclusions. A sound methodology requires not only a summary of the findings, but acknowledgement of any weaknesses in the study or the analytical methods. A strong research methodology also involves identifying areas for future research.

Organization

Economists generally present their research in the form of a paper. Most papers are organized in the following manner: an introduction of the research topic, followed by a review of the literature that summarizes previous research in this area. The paper should then state the research question and articulate the specific methods the researcher will use to investigate. This leads to the data analysis and discussion sections, followed by a conclusions section that restates the research question and summarizes the findings.

References

• Research Methodology in Applied Economics, Don Ethridge, 2004.

Resources

• American Finance Association
• National Bureau of Economic Research