Editing Economics (section)

== Methodology ==
=== Theoretical research ===
{{Main|Microeconomics|Macroeconomics|Mathematical economics}}
{{redirect|Economic theory|the publication|Economic Theory (journal){{!}}''Economic Theory'' (journal)}}
Mainstream economic theory relies upon analytical [[model (economics)|economic models]]. When creating theories, the objective is to find assumptions which are at least as simple in information requirements, more precise in predictions, and more fruitful in generating additional research than prior theories.{{sfn|Friedman|1953|p=10}} While [[neoclassical economics|neoclassical]] economic theory constitutes both the dominant or orthodox theoretical as well as [[General equilibrium theory|methodological framework]], economic theory can also take the form of other [[Schools of economic thought|schools of thought]] such as in [[heterodox economics|heterodox economic theories]].

In [[microeconomics]], principal concepts include [[supply and demand]], [[marginalism]], [[rational choice theory]], [[opportunity cost]], [[budget constraint]]s, [[utility]], and the [[theory of the firm]].<ref>{{unbulleted list citebundle
|1 = {{cite encyclopedia |last=Boland |first=Lawrence A. |date=1987 |dictionary=The New Palgrave Dictionary of Economics |publisher=Palgrave Macmillan |edition= |editor-first1=John |editor-last1=Eatwell |editor-first2=Murray |editor-last2=Milgate |editor-first3=Peter |editor-last3=Newman |volume=III |pages=455–458 |chapter-url=http://www.dictionaryofeconomics.com/article?id=pde1987_X001456 |doi=10.1057/9780230226203.3083 |isbn=978-0-333-78676-5 |chapter=Methodology |access-date=23 October 2017 |archive-date=24 October 2017 |archive-url=https://web.archive.org/web/20171024043230/http://www.dictionaryofeconomics.com/article?id=pde1987_X001456 |url-status=live }}
|2 = {{cite journal |title=Consensus and Dissension among Economists: An Empirical Inquiry |last1=Frey |first1=Bruno S. |last2=Pommerehne |first2=Werner W. |last3=Schneider |first3=Friedrich |last4=Gilbert |first4=Guy |journal=[[The American Economic Review]] |issn=0002-8282 |volume=74 |issue=5 |date=December 1984 |pages=986–994 |jstor=557 }}
}}</ref> Early [[macroeconomic]] models focused on modelling the relationships between aggregate variables, but as the relationships appeared to change over time macroeconomists, including [[new Keynesian]]s, reformulated their models with [[microfoundations]],<ref name="Dixon2008"/> in which microeconomic concepts play a major part.

Sometimes an economic hypothesis is only ''[[qualitative economics|qualitative]]'', not ''quantitative''.<ref>{{cite encyclopedia |last=Quirk |first=James |date=1987 |title=The New Palgrave: A Dictionary of Economics |edition= |editor-first1=John |editor-last1=Eatwell |editor-first2=Murray |editor-last2=Milgate |editor-first3=Peter |editor-last3=Newman |volume=IV |pages=1–3 |chapter-url=http://www.dictionaryofeconomics.com/article?id=pde1987_X001811 |doi=10.1057/9780230226203.3369 |isbn=978-0-333-78676-5 |chapter=Qualitative economics |publisher=Palgrave Macmillan UK |access-date=23 October 2017 |archive-date=23 October 2017 |archive-url=https://web.archive.org/web/20171023230514/http://www.dictionaryofeconomics.com/article?id=pde1987_X001811 |url-status=live }}</ref>

Expositions of economic reasoning often use two-dimensional graphs to illustrate theoretical relationships. At a higher level of generality, [[mathematical economics]] is the application of [[Mathematics|mathematical]] methods to represent theories and analyse problems in economics. [[Paul Samuelson]]'s treatise ''[[Foundations of Economic Analysis]]'' (1947) exemplifies the method, particularly as to maximizing behavioural relations of agents reaching equilibrium. The book focused on examining the class of statements called ''operationally meaningful theorems'' in economics, which are [[theorem]]s that can conceivably be refuted by empirical data.<ref name="Foundations">{{cite book |title=Foundations of Economic Analysis|edition=enlarged |last=Samuelson |first=Paul A. |author-link=Paul Samuelson |orig-year=1947 |year=1983 |page=[https://archive.org/details/foundationsofeco0000samu/page/4 4] |publisher=Harvard University Press |location=Boston |isbn=978-0-674-31301-9 |title-link=Foundations of Economic Analysis }}</ref>

=== Empirical research ===
{{Main|Econometrics|Experimental economics}}
Economic theories are frequently tested [[empirical]]ly, largely through the use of [[econometrics]] using [[economic data]].<ref>{{cite encyclopedia |last=Hashem |first=M. Pesaren |date=1987 |title=The New Palgrave: A Dictionary of Economics |edition= |editor-first1=John |editor-last1=Eatwell |editor-first2=Murray |editor-last2=Milgate |editor-first3=Peter |editor-last3=Newman |volume=II |page=8 |chapter-url=http://www.dictionaryofeconomics.com/article?id=pde1987_X000646 |doi=10.1057/9780230226203.2430 |isbn=978-0-333-78676-5 |chapter=Econometrics |publisher=Palgrave Macmillan UK |access-date=23 October 2017 |archive-date=24 October 2017 |archive-url=https://web.archive.org/web/20171024100955/http://www.dictionaryofeconomics.com/article?id=pde1987_X000646 |url-status=live }}</ref> The controlled experiments common to the [[physical science]]s are difficult and uncommon in economics,<ref>{{cite book|last=Keuzenkamp|first=Hugo A.|author-link=Hugo A. Keuzenkamp|title=Probability, Econometrics and Truth: The Methodology of Econometrics|url=https://archive.org/details/probabilityecono0000keuz|url-access=registration|year=2000|publisher=Cambridge University Press|isbn=978-0-521-55359-9|page=[https://archive.org/details/probabilityecono0000keuz/page/13 13]|quote=... in economics, controlled experiments are rare and reproducible controlled experiments even more so ...}}</ref> and instead broad data is [[observational study|observationally studied]]; this type of testing is typically regarded as less rigorous than controlled experimentation, and the conclusions typically more tentative. However, the field of [[experimental economics]] is growing, and increasing use is being made of [[natural experiments]].

[[Statistics|Statistical methods]] such as [[regression analysis]] are common. Practitioners use such methods to estimate the size, economic significance, and [[statistical significance]] ("signal strength") of the hypothesised relation(s) and to adjust for noise from other variables. By such means, a hypothesis may gain acceptance, although in a probabilistic, rather than certain, sense. Acceptance is dependent upon the [[falsifiability|falsifiable]] hypothesis surviving tests. Use of commonly accepted methods need not produce a final conclusion or even a consensus on a particular question, given different tests, [[data set]]s, and prior beliefs.

[[Experimental economics]] has promoted the use of [[Scientific control|scientifically controlled]] [[experiment]]s. This has reduced the long-noted distinction of economics from [[natural science]]s because it allows direct tests of what were previously taken as axioms.<ref>{{unbulleted list citebundle|{{cite encyclopedia |last=Bastable |first=C. F. |dictionary=The New Palgrave Dictionary of Economics |edition= |editor-first1=John |editor-last1=Eatwell |editor-first2=Murray |editor-last2=Milgate |editor-first3=Peter |editor-last3=Newman |volume=II |chapter-url=http://www.dictionaryofeconomics.com/article?id=pde1987_X000762 |doi=10.1057/9780230226203.2512 |year=2008 |isbn=978-0-333-78676-5 |chapter=Experimental methods in economics (i) |pages=1–2 |access-date=23 October 2017 |archive-date=24 October 2017 |archive-url=https://web.archive.org/web/20171024101031/http://www.dictionaryofeconomics.com/article?id=pde1987_X000762 |url-status=live }}|{{cite encyclopedia |author-link=Vernon L. Smith |last=Smith |first=Vernon L. |dictionary=The New Palgrave Dictionary of Economics |publisher=Palgrave Macmillan |edition= |editor-first1=John |editor-last1=Eatwell |editor-first2=Murray |editor-last2=Milgate |editor-first3=Peter |editor-last3=Newman |volume=II |pages=241–242 |chapter-url=http://www.dictionaryofeconomics.com/article?id=pde1987_X000763 |doi=10.1057/9780230226203.2513 |year=2008 |isbn=978-0-333-78676-5 |chapter=Experimental methods in economics (ii) |access-date=23 October 2017 |archive-date=24 October 2017 |archive-url=https://web.archive.org/web/20171024101020/http://www.dictionaryofeconomics.com/article?id=pde1987_X000763 |url-status=live }}}}</ref> In some cases these have found that the axioms are not entirely correct.

In [[behavioural economics]], psychologist [[Daniel Kahneman]] won the Nobel Prize in economics in 2002 for his and [[Amos Tversky]]'s empirical discovery of several [[cognitive bias]]es and [[heuristics in judgment and decision making|heuristics]]. Similar empirical testing occurs in [[neuroeconomics]]. Another example is the assumption of narrowly selfish preferences versus a model that tests for selfish, altruistic, and cooperative preferences.<ref>{{unbulleted list citebundle
|1 = {{cite journal |last1=Fehr |first1=Ernst |first2=Urs |last2=Fischbacher |date=23 October 2003 |title=The Nature of Human Altruism |journal=[[Nature (journal)|Nature]] |volume=425 |issue=6960 |pages=785–791 |doi=10.1038/nature02043|pmid=14574401 |bibcode=2003Natur.425..785F |s2cid=4305295 }}
|2 = {{cite journal |last1=Sigmund |first1=Karl |first2=Ernst |last2=Fehr |first3=Martin A. |last3=Nowak |date=January 2002 |title=The Economics of Fair Play |journal=[[Scientific American]] |volume=286 |issue=1 |pages=82–87 |pmid=11799620 |doi=10.1038/scientificamerican0102-82|bibcode=2002SciAm.286a..82S }}
}}</ref> These techniques have led some to argue that economics is a "genuine science".<ref>{{cite journal |last=Lazear |first=Edward P. |title=Economic Imperialism |date=1 February 2000 |volume=115 |issue=1 |jstor=2586936 |pages=99–146 |journal=Quarterly Journal of Economics |doi=10.1162/003355300554683}}</ref>