ABSTRACT
Part I of this book dealt with economic theory. Economists theorize for a variety of purposes, a prominent one being the scientific explanation of economic phenomena. But no matter what the pursued purpose is, theory is very unlikely to serve its purpose well unless it is supported by evidence. Part II therefore looks at the topic of evidence, the generation of empirical support or methodology. There are two main types of method for generating empirical support in economics: observational and experimental methods. Observational methods, as the term suggests, aim to draw conclusions about economic theories without the benefit of interventions designed by the economist. In practice, economists rely on the work of statistical offices and other data-supplying bodies, and analyze the data given to them by means of statistical and econometric models. Econometrics is the topic of Chapter 9. Experimental methods require a more active role in the data-generating process on the part of the economist. The economist designs and executes an intervention, observes and records the result and only then analyzes the data, often also using statistical techniques that are as elaborate as those of observational methods. Economic experiments will be considered in Chapters 10 and 11.
