2 introduction part 1

7/28/2019 2 Introduction Part 1

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ECO 4451 Student Lectur e Notes 1

Research Methods in Economics

Research Methods in

Economics

ECO 4451

Research Methods in

Economics

Introduction

Part 1

What Is Research?

Stating a question & seeking itsanswer

Confirming an answer already knownby othersSynthesizing existing knowledge todevelop an answer independentlyDiscovering new knowledge

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Your Research Project

Assignment is to conduct anindependent analysis that seeks toanswer a research question .

What does this mean?

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Whats a Research Question?

A good research question hasseveral characteristics, but

fundamentally it isA question, the answer to which isunknown or in doubt.

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Whats an IndependentAnalysis?

You. . .collect information or data needed to answer theresearch question.apply a method of analysis that would reasonably

information.evaluate the information

weigh the evidenceconsider the quality or uncertainty of theevidence

draw conclusions supported by your analysis

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Conducting an IndependentAnalysis

The simplest way to conduct an independent

analysischoose a research question that lends itself to astatistical test of a hypothesis.

Less quantitative approaches make it harderto

Credibly demonstrate independence of workReach clear conclusions

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Research Questions

A good research questionIs interesting and/or important from aneconomic perspectiveIs clearly statedHas a logical rationale & is tied toeconomic theoryIs doable but not trivial

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Research Answers

Research answers shouldBe clearly statedSupported by the analysis conductedBe generalizableBe put in contextHave implications or generate newquestions

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From Questions to Answers: TheResearch Process

Good researchIs incrementals e ca

Can be replicatedEmploys appropriate design &analysis

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Where Do Research QuestionsCome From?

Provided by a clientsomeone hired you

ossorganization you work with

Generated by researcher

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Finding a Research Question

Start with a general area of interest& refine to a research question.What interests you?

,classes, current events

Would this interest others?What have others done?

Extend it, or do it in a different setting.

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Finding a Research Question

Is it doable?

not too broadnot more work than you can do

acquiredGet a few ideas & critique them

your first idea may not be the bestmay need to be refined significantly oreven dropped

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Common Errors inProject Selection

Its not a research question see next slides

Its a research question, but the analysis islikel to de enerate into a re ort onrather than an independent investigation ofAdequate data are not available

You care too much to be objective

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Example: Its not a research question

Researchers work with statementsabout relationships between conceptsand/or constructs. For example,Behavior that is rewarded will be

repeated


Researchers translate such statementsinto hypotheses containing variablesA variable is somethingthat takes onspecific values.Example

More time spent studying (variable #1)improves test performance (variable #2)


Researchers translate such statementsinto hypotheses containing variables

For example,Behavior that is rewarded will berepeated becomes

Does positive feedback aboutperformance improve performance?Q: Which are the 2 variables here?

Common Errors in Project Selection(Cont)

The problem is too hardAny answer obtained could not be generalizedEvidence to answer the question cannot beobtained

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Some Common Kinds of Research Questions

The following slides illustrate somecommon kinds of research

student papers in previoussemesters.

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Does A affect/increase/decreaseB?Does female education reduce fertilit in developing countries?Does crime in a neighborhood reducehousing prices?Does watching local TV news lead tounrealistic crime perceptions?

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If A is a deliberate policy, sometimes theDoes A affect B? question is rephrased asIs policy A effective/cost-effective/efficient in

Do educational reforms improve studentachievement?Does gun control reduce the murder rate?Does a higher legal drinking age reduce drunkdriving fatalities ?

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Sometimes the direction of the effect of A onB is pretty well known, but the size of theeffect is not.

How much do ethanol subsidies raise the price of corn?

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What are the determinants of X?What determines earnings of

baseball la ers, olf ros, CEOs ,lawyers ?What factors influence electionoutcomes?What determines box office returnsand profits on films?

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Is X larger/better/different than/from Y?Do baseball teams with higher payrolls win morethan teams with lower payrolls?

Is the conviction rate higher with public defendersan w pa counseWould a traditional or a Roth IRA yield higher annuity withdrawals during retirement?

Are common consumer goods priced equivalentlyin Germany and the US?

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Should agent A take action B?Should the US replace the income tax with aconsumption tax ?Should social securit be chan ed to include private accounts ?Often this kind of question is more doable if itsrephrased as What effect does action B have onX, Y or Z?

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Other Examples of ResearchQuestions

What is optimal allocation of salary to build awinning hockey team?Does abortion reduce crime?

cause manu ac ur ng wages odecline in the US?What factors influence impulse purchases?

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What determines the margin of victory inelections in Florida?What determines charitable contributions to

Do higher quality schools raise housingprices in the area?

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Is Volusia Countys sea turtle protectionprogram effective?

Are prison farms economically efficient?a are e cos s an ene s o pursu ng a

graduate degree in economics?

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Key Starting Point

First step must beState your research questi on

Very Important

Identification of variables neededData collectionWhat empirical method(s) to useShapes all subsequent decisions in research

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What Is Economics Research?

Defined as much by the way of thinking as bythe subject matter.Microeconomics.

Interaction of agents in market and non-marketsettingsOptimizing behavior (choices)

and responses to incentivesEquilibrium

and changes in equilibrium in response to changingconditions

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What Is Economics Research?

Macroeconomics.Aggregate behavior of economy or largesegments of itBased on microfoundation of behavior of individual agents & their interactions

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Economics Research

What factors are responsible for the 50%increase in obesity among US adults sincethe late 1970s?

, ,Weight gain is determined by calories in vs.calories out.

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Economics Research

Chou, Grossman and Saffer, An economicanalysis of adult obesity., JHE 23 (2004)565-87:

A behavioral model of obesity must explain thedeterminants of calories consumed and caloriesexpended. (p569)The principal hypothesis to be tested is that anincrease in the prevalence of obesity is the resultof several economic changes that have altered thelifestyle choices of Americans. (p565).Obesity as an outcome of responses to economic

incentives.33

Economic analysis of obesity

What could be the economic changes thatlead to increased obesity?

Homework

Read the paper. Note the focus on:Consumer demandRelative prices

Note how theyGenerate hypotheses

Test hypotheses

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Economic analysis of obesity by a student

Homework

Compare the paper by Fowler (a student)and its consideration of income and obesit vs. the Chou et al. article.

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Economics Research astudent paper

J acobs, Is there a preferable way toassemble an NHL team under a specifiedbudget? (On the class website.)

different kinds of players to maximize wins?An example of the basic problem inmicroeconomics

How to allocate a scarce resource among competingendsOptimization subject to constraint

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Allocation of hockey salarybudget

Homework

Read the J acobs paper.Notice:

Data collectionAlternative approaches used to analyze dataHow economic theory is used to generate ahypothesis for the optimal allocation of salarybudgetHow the functional form of the regression ischosen to allow the hypothesis to be tested

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