ABSTRACT
Systems of interdependent simultaneous equations have been used extensively to describe social behavior in the field of economics or, more specifically, in econometrics. A system of equations in the social sciences is usually considered a nonexperimental model. This chapter shows that the results of applying the Theil-Basmann method to a system of simultaneous equations involving both sociological and economic variables. Control of economic resources has been emphasized as a basis of influence in society, as Cartwright has pointed out in an excellent summary on the matter. The chapter reviews the identification problem. It provides the logic of the two-stage estimation procedure. The chapter examines a specific model concerning the diffusion of technical innovations. The diffusion model was developed in part from already existing theory and in part from established empirical relationships. To illustrate the application of the two-stage technique, a diffusion model is specified.
