Basic Concepts of Research

Definition of Research
1. Websters Collegiate Dictionary (1977) defines
research
2. Andrew and Hildebrand (1982, p.3) define research
3. Ghebremedhin and Tweenten (1994, p.4) define
research
4. Leedy (1985, p.4) defines research
5. Research defined by Ethridge (2004) on the basis of
the above definitions is that research is the
systematic approach to obtaining and confirming
new and reliable knowledge.
 Basic Concepts of Research
Characteristics of the Above Definition:
1. Research is not limited to certain types of activities
such as laboratory methods or literature searches.
2. Research is systematic and orderly. As an approach
research follows a sequence or a series of steps
(with variations in the components and their order).
3. The purpose of research is new knowledge (what is
not already known) and the knowledge must be
reliable (demonstrable to others based on reason
or evidence).
 Basic Concepts of Research
Research is Not:
1. Accidental discovery: however when such discovery or
observation lead to a structured research process that
is directed toward verifying or understanding the
observation, that process may in turn lead to a new
reliable knowledge!
2. Data collection: to the economists, data may provide
the means to achieve another objective, i.e.
establishing relationship among forces, factors, or
variables.
3. Searching out published research results in libraries:
although this is an important part of the research
process, but the research does not stop there.
 Basic Concepts of Research
Research is:
1. Searching for explanations of events, phenomena,
relationships, and causes, at least in economic research.
2. A process:
. Research is planned and managed, unless structured
carefully, the research knowledge cannot be reliable
(demonstrable to others on the basis of generally accepted
rules of evidence),
. It is interactive and cannot be done in isolation from prior
research or stimulation from peers and coworkers,
. It is also creative by creating new knowledge and by adopting
some new designs for every research project,
. And it is also circular by leading to more research questions.
 Basic Concepts of Research
Classifications of Research: There are different criteria on which to
base the classifications, and they may each be useful for specific
purposes. A brief discussion of several of them is provided below.
1. Basic vs. Applied Research:
. Basic research can be characterized as that which attempts to
determine or establish fundamental facts and relationships within a
discipline or field of study. Basic research is conducted with relatively
little emphasis on its applications to real world policy and management
issues.
. On the other hand, applied research is the research undertaken
specifically for the purpose of obtaining information to help resolve a
particular problem. Applied research has a definite purpose and is
conducted to resolve real world problems.
. However this classification is of limited usefulness. Some basic
research is conducted to develop a method, measurement, or theory so
that an applied problem can be addressed. Is that research basic or
applied?
 Basic Concepts of Research
2. Disciplinary, Subject Matter, and Problem Solving Research: This
classification of types of research has been done by Johnson (1986b) and it is
perhaps the most comprehensive and useful one developed to date.
Disciplinary Research: It is that research which is designed to improve a
discipline. It dwells on theories, fundamental relationships, and analytical
procedures and techniques within the discipline.
Subject-Matter Research: It is research on a subject of interest to a set of
decision makers facing a set of practical problems. This type of research tends
to follow subject-matter boundaries within a discipline- for example resource
economics, labor economics, production economics- and is inherently
multidisciplinary because it draws information and ideas from other disciplines.
The distinction between disciplinary and subject-matter research can
be illustrated with the following examples: medicine, a subject-matter field,
utilizes the disciplines of biology, psychology, and chemistry (as well as other
disciplines); management uses the disciplines of economics and psychology;
engineering uses mathematics, physics, chemistry, and other disciplines.
Biochemistry, all engineering fields (civil, mechanical, electrical etc.), colleges
of agriculture (agronomy, animal sciences etc.), different fields in economics
like consumer economics, resource economics, public policy, development etc.
 Basic Concepts of Research
Problem-Solving Research: It is designed to solve a specific problem for
a specific decision maker. It is more directly linked to a particular decision
process than is subject-matter research. It is not more problem oriented
than other types (as all research is directed to a defined problem), but the
problems it addresses are more oriented to specific, individual applications.
3. Analytical vs. Descriptive Research:
Descriptive research may be characterized as simply the attempt to
determine, describe, or identify what is, while analytical research attempts
to establish why it is that or how it came to be.
The intent of descriptive research is synthesis rather than analysis.
Synthesis or description attempts to pull knowledge or information
together and decipher its logically plausible connections (synthesize) rather
than take the information apart to examine why and how it came to be
(analyze).
Descriptive research establishes the structure of an industry- number, size,
location, and so on of firms within an industry. The corresponding analytical
research on that same topic might be to determine the behavior of that
industry in terms of pricing and other competitive behavior.
 Basic Concepts of Research
Methodology: The study of the general approach to inquiry in a
given field. Thus research methodology in economics is the study of
the general approach to research in economics.
Method: It refers to specific technique, tools, or procedures applied
to achieve a given objective. Research methods in economics include
various versions of regression analysis, mathematical analysis,
operations research techniques, surveys, gathering data etc.
So we can say that methods are a portion of methodology.
Research methodology in economics is the study of the approach to
research in the discipline of economics, while, economic methodology
is the study of the general approach to economic reasoning and
validation of economic concepts. Economic methodology relates to
the disciplinary basis (reasoning) of economics, while, research
methodology focuses on the process of developing information and
knowledge which may provide application knowledge and/or
additional disciplinary understanding.
Basic Concepts of Research
The Process of Research
i. Question/Problem
ii. Objectives/Goals
iii. The Research Design-Research
Plan/Methods etc.
iv. Generating or Producing Results
v. Interpret Results and Draw Conclusions
. Dissemination of Research
 Basic Concepts of Research
Creativity in the Research Process
Creativity is defined as the generation and implementation of new
ideas.
Types of Creativity
a. Imaginative Creativity-painters and writers
b. Natural Creativity-natural physical or mental ability and exhibited by
performance-dancers, musicians, athletes.
c. Prescriptive Creativity-what if-religion and philosophy-economics
engage in it by giving public policy prescriptions and guidelines.
d. Applied Creativity-application of concepts to solve problems-problem
solving discipline.
e. Theoretical Creativity-development of relationships between things-
abstract concepts-is part of most academic disciplines.
. In economics creativity may be posing a new question, reformulating
an existing problem, finding new data sources with which to test a
proposition, developing a new model, extending mathematical or
statistical techniques (Krueger et al., 1991, p.1049).
 Basic Concepts of Research
Stuller (1982) and Ladd (1987) provide the following suggestions for
fostering creativity:
A. Gather and use previously developed knowledge.
B. Exchange ideas with other people.
C. Capture your intuition
D. Cultivate the ability to look at things in alternative ways-maintaining
a degree of doubt.
E. Question or challenge assumptions
F. Practice searching for patterns or relationships among occurrences
or things
G. Do not be afraid to take risks
H. Cultivate a degree of tolerance for uncertainty
I. Allow your curiosity-to build a creative tension
J. When you are unable to solve a problem-abandon it at least in your
conscious mind-to allow your unconscious mind work on it
K. Discipline yourself to write down your thoughts
L. Create situations in which you have freedom from distractions
 Methodological Concepts and
Perspectives
Science
Economics As Art and Science
Knowledge
Private vs. Public Knowledge
Ways We Obtain Knowledge
Reliability of (Public) Knowledge
Logical Fallacies
Tests for Reliability
Role of Personal Objectivity
Scientific Prediction
 Science
Biological and physical are usually
know as science.
This book treats science as systemic
inquiry rather than a predesignated set
of disciplinary areas.
Science is the organized accumulation
of a systemic( reliable) knowledge for
the purpose of intelligent
explanation/prediction (Williams, 1984).
 Continued
Various Aspects of the definition
a) Intended Purpose -----Explanation/Prediction
. Explanation relates to what/ why /how (occur)
. Scientific Prediction is always conditional prediction, i.e. if x,
y, and z occur, then w will follow.
b) Science gives us tools (accumulated knowledge) with which to
do research while research adds to the accumulated body of
reliable knowledge. The two are mutually interdependent.
c) Yet they are different and the distinction is important:
. Science is as a body of accumulated knowledge is an entity;
but it is not static or unchanging entity.
. Research is a process through which the body of science is
expanded and the existing body of science is tested for
correctness or validity.
. Research draws on the body of accumulated knowledge as an
integral part of its process, and the accumulated knowledge is
expanded through the research process.
 Economics As Art And
Science
Classification of Science
Physical or Hard Sciences.Chemistry, Biology, Physics
Social Sciences.Economics, Sociology, Anthropology, etc.
The physical sciences are concerned with things while the social
sciences are concerned with human social behavior.
The physical sciences were first to adopt the designation of
science with heavy orientation in the philosophy of positivism
and strong empirical tradition-reliance on observation and data.
The laboratory experiments became their sole or primary
model for being designated as scientific.
However it is hard or nearly impossible to conduct controlled or
laboratory experiments in social sciences. Social sciences and
especially economics have substituted and developed more
sophisticated multivariate conceptual and statistical techniques
to adjust for a myriad of forces that affect the major variables of
interest.
 Continued
Economics is influenced by normative philosophy which accepts
social and individual values as being entities open to scientific
inquiry.
Positivist may accept the study of things as real because they
have observable physical dimensions but values cannot be real
because they have to do with states of mind.
They exclude economics as a science because it fails to use a
traditional laboratory or because they define science in terms of
specific methods rather than in terms of the methodology (the
general approach).
Physical sciences place more emphasis on data while social
sciences more emphasis on theory.
Physical sciences verify their theories through experimental
design and data generation. While as social sciences study more
complex human social behavior so it is hard to verify all social
science theories through data and controlled experiments.
This does not however necessarily make social science theories
less real.
 Continued
Physical science relies more heavily on conceptualizations and
somewhat less on controlled experiments than some other
physical sciences. Similar is the case with disciplinary economics
but not with the subject-matter or problem-solving work within
the various fields of the discipline.
Whether economics is science or art? Its both science and art. It
is a science in terms of its accumulated knowledge base, its
descriptive knowledge and its procedures. This includes economic
research activities. It is both a science and an art in terms of
applying that knowledge to current issues and problems.
we all practice science to some degree within some boundaries,
but include the practice of art, and become more
multidisciplinary, when we attempt to make it applicable to
problems and issues that are of concern in the larger practical
world in which we participate.
 Knowledge
Positivistic vs. Normativistic Knowledge. The classification is based
on Johnson (1986b, pp. 16-20).
Positivistic knowledge is knowledge of conditions, situations, or things
that are directly observable or measurable.
Normativistic knowledge is knowledge about values.
Normativistic Knowledge being subdivided into
a) Prescriptive Knowledge is knowledge of what ought/ought not be
done to solve a specific problem. Prescriptive knowledge can be
unconditional or conditional. Unconditional prescriptive knowledge
takes the form of Prescription X is best (irrespective of the
circumstances). Persons claiming unconditionally prescriptive
knowledge assume the attitude that their prescriptions are above
question. Conditionally prescriptive knowledge is tempered by
circumstances. It takes the form of if the objective is Y, then the most
effective approach is prescription X. Conditionally prescriptive
knowledge recognizes that prescriptions are conditional on objectives
and constraints.
b)Knowledge of Values is knowledge of the goodness and badness of
conditions, situations, and things.
 Continued
Private vs. Public Knowledge
o Public knowledge is knowledge that can be demonstrated to others
through logic or evidence.
o Public knowledge is, by definition, reliable knowledge. Reliable
knowledge is public in nature; it is not depleted when shared (and often is
expanded by sharing), and others cannot be excluded from its use (Stephan,
1996, p. 1200).
o Private knowledge is that which we accept or know (feel, believe,
trust, etc.) things that we accept as reliable for ourselves but have no way
to demonstrate to others.
o Perhaps the clearest example of private knowledge lies in the area of
religious beliefs. Acceptance of its validity rests on faith.
o Knowledge in any field or discipline is private knowledge if its reliability
cannot be accepted on the basis of evidence.
o Example: Capitalism is better than socialism, the reliability of this subjective
proposition cannot be demonstrated because the criteria depends on ones
view of what constitutes better.
o On the other hand, the knowledge that capitalism with competitive markets
allocates goods and services more efficiently than does socialism can be
demonstrated with logic and evidence, given a specific definition of efficiency.
Ways We Obtain Knowledge
We obtain knowledge through six primary means:
1. The senses:
i. Sight, sound, touch, taste, and smell,
ii. As the first step gaining private knowledge,
iii. It is the principal means of deriving value- free positivistic
knowledge,
iv. This may be classified as private facts rather than public
because (a) our perceptions through our senses differ among
individuals (b) the sensory information may not be capable of
being demonstrated as there is nothing certain in our sense
experiences because we interpret in light of what we have
already learned (Simkin, 1993, p. 23).
2. Experience:
i. Experience constitutes the accumulated total of ones exposure
to and interaction with people, places, things, circumstances,
ideas, senses, and so on.
 Continued
ii. It may or may not be reliable, depending on its nature,
iii. It is private until measures are taken to make it public,
iv. It is disorderly and unorganized means of learning however we
use our experience to evaluate new knowledge in its relation to
prior knowledge.
3. Intuition:
i. It is the sensing or feeling of something being accurate or not.
ii. If it constitutes knowing, it is knowledge in a vague form. As
such, it is inherently private knowledge only.
iii. However, an intuitive understanding of a fact, relationship, or
set of relationships, may lead to an orderly explanation and
logical development, which leads, in turn, to public knowledge.
iv. Back (no date) suggests that intuition may be a necessary
condition for a successful research, but it is not a sufficient
condition for finding reliable knowledge.
 Continued
4. Revelation:
i. The reception of knowledge from a vaguely defined or
unknown source,
ii. It is not confined to divine revelation in a religious context,
iii. Most of us have experienced an idea out of the blue; something
that just occurred to or dawned on us,
iv. It may spring from the unconscious mind and it probably relates
to intuition, perhaps experience,
v. Revelation as a source of knowledge is, however, not reliable,
vi. It became reliable knowledge only if it meets the tests for
reliability,
5. Measurement:
i. Knowledge gained through measurement (quantification) is
normally thought as data,
ii. Its connection to the senses and experience is obvious,
iii. This is usually regarded as factual knowledge,
 Continued
iv. This is usually regarded as reliable knowledge most of the time,
with the implicit understanding that there may be a sampling or
measurement error associated with it,
6. Reasoning:
i. It may be viewed as the final test of knowledge or gaining
knowledge,
ii. It is the only way to derive reliable knowledge of relationships
and patterns through which we develop explanatory or predictive
capability,
iii. Of the two avenues to reliable knowledge- measurement and
reasoning- reasoning constitute the only avenue to useful
disciplinary, subject-matter, and problem-solving knowledge,
iv. This does not say that reasoning alone can establish reliable
knowledge, only that if knowledge cannot pass as logical, it is not
trustworthy,
 Reliability of (Public)
Knowledge
There are two general criteria for establishing reliability
of knowledge:
1. It can be supported by evidence
2. The way the evidence is obtained or generated can be
demonstrated or produced
. This evidence may be quantitative (i.e. data) or
. It may be more complex logical constructions that include data
but proceed on to relationships, generalizations, or
deductions/inductions from the data.
. In the first instance the observed phenomena may be
measurable, or at least capable of being described or
represented (e.g. photographed, drawn). We think of this as
factual information or knowledge.
. But how do we establish the reliability of things that we cannot
observe directly? We do it through reasoning or logic.
. Logic may be classified as being of two general types,
deductive and inductive.
 Continued
1. Deductive Logic: It is the process of reasoning from general
premises (e.g. assumptions) to specific results or conclusions.
.Example 1: Economic theory rests largely on deductive logic.
Theories of market behavior start with assumptions about
market structure, peoples motivations and objectives, and
influence of external forces, then deduce a set of behaviors of
market prices and quantities from those conditions.
.Example 2: Mathematics may be the most clear-cut example of
deductive logic. It begins with a set of definitions (of numbers,
sets, etc.) and derives through deduction, a large, complex
system of theorems, laws, rules, and so on about behavior of
numbers and systems of numbers.
2. Inductive Logic: It is reasoning from the specific circumstances
or outcomes to a conclusion about general circumstances or
outcomes. It may also be represented as an empirical process of
reaching a conclusion or arriving at new principles from known
data and experience by observing objective realities
(Ghebremedhin and Tweeten, 1994, p. 10).
 Continued
Example 1: The most applicable explanation of
induction for economics is statistical inference.
By structuring a random sample of a larger
population, collecting data about that sample,
and analyzing the data using established criteria
and procedures, we can infer characteristics and
behavior about the entire population from the
sample analyzed. The generalizations about
the larger world based on analysis or study
of portions of it are based on inductive
reasoning.
 Logical Fallacies
The following are some of the logical fallacies, an awareness
of which can make scientific inquiry (i.e. research) more
efficient.
a. Special Pleading: This logical fallacy occurs when one uses only the
information that supports a predetermined position or conclusion,
while ignoring other information.
b. Affirming the Consequent: This logical fallacy occurs when
conclusions are based on premises without examining the validity of
the premises. An example is the unqualified conclusion that free
markets always lead to an optimum social welfare. We know that
optimum social welfare can occur under certain circumstances, but
the existence of monopolistic power, market externalities, and other
factors can negate that result.
c. Attacking the Person: This fallacy involves rejecting a position or
conclusion because of attitudes about the person or group
presenting the position or conclusion. It may take the form of what
individual X says is false because X is a Democrat (or Republican or
black or Catholic, etc.).
 Continued
d. Appeal to the People: This involves accepting or rejecting a
position or conclusion because a large number of people accept
or reject it. This fallacy has some elements in common with the
fallacy of affirming the consequent.
e. Appeal to Authority: This fallacy occurs by automatically
accepting a position, proposition, or conclusion because its
source has specialized or in-depth knowledge of it. It may take
the form of statement A is true because individual (or group) X
says it is true. This fallacy also has some obvious common
elements with affirming the consequent and can be viewed as a
variation on the fallacy of appeal to the people.
f. False Cause: This fallacy (also called the post hoc fallacy) is
the danger of attributing the wrong cause to an effect. It reasons
that because event B occurs after event A, A causes B. An
example is California has the highest per capita consumption of
wine in the US and the highest incidence of blindness; therefore,
wine causes blindness.
 Continued
g. Argument by Analogy: This fallacy reasons that A is similar to
B, so what is true for A is also true for B. Example is that
because certain government policies are effective in the US,
they also would be effective in China or Pakistan etc. This
fallacy also is related to affirming the consequent.
h. Composition and Division: The fallacy of composition reasons
that what is true for a part (an individual) is automatically true
for the whole (the group). An economic example of this is since
an individual consumer cannot affect the price of milk, all
consumers collectively cannot affect the price of milk. The
fallacy of division reasons that what is true for the whole is
automatically true for each part. An example is that because a
nations income is greater when consumption increases,
individuals incomes are automatically greater when they
consume more.
 Tests for Reliability
When evaluating overall reliability, there are at least three
tests that are recognized:
1. The Test of Logical Coherence
. To examine an outcome or proposition that if it is free of logical
contradictions.
. This amounts to examining the outcome or proposition to see if it is
free of logical errors and logical fallacies.
. When empirical observations or data are involved, this test fails to
ensure the reliability of the outcome or proposition.
. When applied to theory, it is a test of whether the conclusion follow
logically from the assumptions.
2. The Test of Correspondence
. It involves comparing an outcome or statement to what is already
known to see if it is consistent with (corresponds to) prior knowledge.
. When applied to theory, it examines whether conclusions are
supported by empirical evidence.
. It does not mean that what contradicts with the conventional wisdom
is not reliable, however, it constitutes one piece of evidence to support
a result, statement, or position.
 Continued
3. The Test of Clarity
. It examines the outcome or proposition for lack of ambiguity or
vagueness.
. If the result or proposition has more than one meaning, it fails the
test of clarity.
. Johnson (1986b) uses over identified and under identified reduced
form simultaneous model equations to illustrate a lack of clarity.
. Another illustration is the development or application of a concept
when the terms used in the concept are not defined and their
meanings are ambiguous.
. When applied to theory, it is a test of whether the theory is
consistent with all the facts pertaining to the theory (Eichner,
1986, p. 5).
. Unless a result or proposition meets the test of clarity, applying
either of the other two tests may not be possible.
 Continued
4. The Pragmatists Test of Workability
. It requires that the result solve the problem or issue
addressed.
. The outcome or proposition must achieve the desired
result; it must work.
. The addition of this test as test of reliability is relevant, of
necessity, for economists engaged in problem-solving
research.
. It is not relevant for those engaged in disciplinary
research.
. This tests advocate that workability may be a useful test
in a given circumstances, but not as a test of reliability to
be applied universally.
 Continued
Example: Consider the situation of a physician giving a child
a smallpox vaccination.
Does the action meet the test of correspondence? For the
physician, yes, because he or she knows that it has worked in
all previous cases. For the child, probably no, because he or
she lacks prior knowledge of the results.
Does it meet the test of coherence? It does to the physician
(who understands the concept) but not to the child (who does
not understand how being hurt can help).
The action meets the clarity test for the physician, who
understands how the immunization occurs, but not for the
child, who cannot grasp the process.
The test of workability in this case is whether the child ever
contracts smallpox.
 Role of Personal Objectivity
Objectivity of the researcher/scientist is the lifeblood of reliable knowledge.
Personal objectivity includes avoiding trying to impose our private values
and beliefs on others.
It doesnt mean that a completely objective state of mind must always be
achieved, but that it be diligently sought.
The subjective, or subjectivity, is that which is conditioned by personal
characteristics of mind: it is associated with beliefs, values, and opinion.
Private knowledge is subjective if it is not demonstrable to others.

Some things that are normativewhat someone thinks should beare also
subjective.
Personal judgments are prescriptions that are without logical or empirical
support are both normative and subjective.
However, all normative matters are subjective. The knowledge of values is
not subjective in a personal sense.
The point of distinction is that we cannot deal with personally subjective
matters in science or research because there is no way to derive reliable
public knowledge from personal subjective positions by themselves.
 Continued
The objective, or objectivity, is that which is independent of
characteristics of mind: it relies on what is demonstrable by
observation, measurement, and logic.
Things that are positiveidentification or specification of what is are
also objective: they are free of personal values and beliefs.
Issues, proposals, problems, and questions that are stated in
personally objective rather than subjective terms are easier to deal
with in the realm of public knowledge.
Example: The US should lower import tariffs on a group of goods (a
proposition stated subjectively) is arguable and difficult to deal with in
a research and scientific context.
Statements about the effects of lower import tariffs on some set of
target variables such as domestic consumer and producer prices,
national income, balance of trade, and payments are more easily
debated as public knowledge.
The second statement is in a judgment-free language that constitutes
a valid research question or objective.
 Continued
As a means of distinguishing between
subjective and objective in the research
process, the two following distinctions are
useful:
1. A proposition or concept is objective if it
passes the tests of coherence,
correspondence, and clarity.
2. A researcher or individual is objective if he or
she is willing to subject statements to tests of
coherence, correspondence, and clarity and
abide by the results.
 Scientific Prediction
As science is the organized accumulation of systematic, reliable
knowledge for the purpose of intelligent explanation or prediction,
so we now discuss some conceptual aspects of scientific prediction.
The laymans concept of prediction is typically forecasting or
foretelling future events without qualifying conditions on the
forecast.
However, scientific prediction is understood to be conditional
because we have no way of knowing with certainty what all of the
future conditions that affect an outcome will be.
Example: an unqualified prediction might be: GNP next year will
increase by 4 %. The corresponding conditional prediction might
be : If all the economic sectors perform as we expect (as we
assume they will perform), then GNP next year will increase by 4
%.
The basis of scientific prediction is theory in conjunction with
empirical knowledge, including experience. To examine and
evaluate this important proposition, we need to define terms fact,
theory, and hypothesis.
 Continued
Fact:
1. It is a verifiable observation and constitutes a portion of
knowledge.
2. They are observations that we establish through senses and/or
measurement, and they can be demonstrated to and verified by
other observers.
3. Facts are positive, i.e. they are independent of value judgment--
they establish what is, at least for a specified purpose.
4. Facts, while they constitute reliable knowledge, are not
necessarily permanent, and are not by themselves useful for
prediction.
5. This concept of fact is different from the popular use of the term,
which treats fact as what is known to be true. It is a more
vague generalization (i.e., an impression) than a defined term
with a specific meaning.
 Continued
6. The distinction between facts and values may depend on how a
proposition is presented. Example: hunger is bad is a value judgment.
98 % of US population believes that hunger is bad may be a fact.
7. Facts have two basic functions (Williams, 1984; Edwards, 1978): (i) To
initiate theory. Observations of outcomes (facts) in the world we observe
gives rise to the need to explain how these facts occur (ii) It assists in the
reformulation, expansion, and clarification of existing theory. When we
observe facts that are not fully consistent with existing theory, the
discrepancies must be addressed.
. Theory:
1. It establishes relationships, using facts as building blocks.
2. The popular understanding of theory is that it is unfounded speculation or
a premise without regard to reality or application (e.g., that may be true
in theory, but). WRONG!
3. Theory is made up of carefully thought out relationships that hold when
the specified conditions are met. The only test of a theory is its internal
logic.
 Continued
4. Theory is what gives us predicative/ explanatory ability. It permits
us to say: if conditions A, B, C, and D exists, as we anticipate
they will, then X and Y should occur.
5. No given theory can possibly fit all circumstances.
6. When a specific theory does not fit a given current situation, that
does not invalidate the theory, it indicates that it is not applicable
for that purpose.
7. Theory cannot provide easy magic answers for complex
problems. Indeed theories provide us with the framework with
which to approach the analysis of these complex problems.
8. Theories provide conceptual framework for analysis in applied
research while real world problems/facts may initiate the
development of a theory.
9. All theories are abstractions and simplifications of reality because
no theory can take care of each and every variable that could ever
affect an outcome.
10.All theories are generalizations too; they apply to a general class of
circumstances. It can be adapted to different specific situations.
 Continued
11.Heady (1949) identified five functions of economic theory in
empirical research: formulating the research problem; formulating
hypotheses; designing empirical procedures; assembling
appropriate data and; interpreting findings.
. Hypothesis:
1. It is a result or outcome that is not yet evaluated or tested.
2. A hypothesis must be capable of being rejected or not rejected.
3. In economic research, hypothesis are tested to evaluate the
statistical significance of individual parameters and the statistical
fit of the entire model.
4. Statistical or quantitative hypotheses must have three
characteristics to be fully justified: (i) they must have a conceptual
basis, that is, be built on theoretical reasoning (ii) they must be
sufficiently specific to be rejected or not, based on the data (iii)
there must be data and techniques available to test them.
 Continued
5. Another class of hypotheses may be identified as qualitative or
conceptual hypotheses (Tweeten, 1983). These hypotheses do not
lend themselves to formal, quantitative evaluation.
6. Although not testable in an empirical sense, they can be agreed
upon or not by informed, objective evaluators. They may be
accepted or rejected by weight of evidence by reason.
7. These hypotheses are grouped by Tweeten into three categories: (i)
Maintained Hypotheses are things assumed to be true for purposes
of a study being conducted. For example a specified market is
structurally competitive. (ii) Diagnostic Hypotheses are propositions
about the causes of a problem. For example cheap food policies of
developing countries contributes to low agricultural productivity.
(iii) Remedial hypotheses are proposed solutions to problems and
offer prescriptions for potential solutions to problems. For example
removing price control Z would increase food production within the
country to a domestic subsistence level.
8. These hypotheses frequently appear in the conclusions or
implications of research.