«Significance of Econometrics and Quantitative Methods to Economists» - Free Essay Paper
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Quantitative methods refer to techniques that present data in numeric form. The term quantitative methods derives from the word ‘quantity,’ and these methods entail the measurement of the amount or quantity of a particular variable. Since quantitative studies and econometrics express data in the form of numbers, researchers are in a position to employ statistical tests to make inferences and statistical statements related to raw facts and figures. Raw data collected through quantitative research, for instance, data gathered on consumer preference, demographics, or market size, are significant in making economic decisions. Econometrics and quantitative methods explicitly present important economic variables in the form of numbers that are easy to understand and analyze.
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Econometrics plays a critical role in expounding the relationship between economic variables. However, some economists argue that for quantitative methods to be more effective in the economic decision-making process they are supposed to be combined with qualitative methods. Nevertheless, quantitative methods remain largely effective and efficient tools in making economic decisions, and qualitative methods only serve the purpose of complementing econometric methods. Furthermore, quantitative methods focus on collecting raw numerical facts and figures and making the generalization of the population parameters using statistical findings. In essence, quantitative methods enable economists to make economic decisions on the basis of sample statistics, thus making quantitative methods a useful tool because it is both a time and cost saving technique. Moreover, quantitative methods are useful in making economic decisions because they are objective in nature, taking into consideration that they employ the computational technique in analyzing the collected data. The salient features of quantitative methods, such as objectivity and time saving, make quantitative methods a powerful tool for making economic decisions. Quantitative methods are more efficient in hypothesis testing as compared to qualitative methods (Judge and Mittelhammer 7). Most importantly, researchers achieve clarity when employing quantitative methods while researching the set questions.
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Advantages of Quantitative Methods
The use of the quantitative technique in economic research has a wide range of benefits to both the economic researchers and the consumers of economic research. For instance, personal bias is avoided through the use of accepted computational techniques when analyzing economic data. Another merit of using quantitative methods in economics is that they create a possibility of more comprehensive studies by incorporating a wide range of subjects, thus enabling the generalization of sample statistics to the population parameter. A greater level of control of variables under consideration is achieved through the use of the sampling technique. In addition, quantitative methods allow replication in economic research. Moreover, quantitative methods enable to achieve precision in research. The formulation of causality statements is possible with quantitative method as well. Besides, the quantitative technique and econometrics summarize a variety of sources of information as well as make a comparison over time and across categories. Quantitative methods are more objective and accurate compared to qualitative methods (Ashley 54). Sophisticated analysis is achieved through the use of quantitative techniques in research. Most importantly, when quantitative methods employ well-established standards, it enables the findings of quantitative research to be replicated, analyzed, and even compared with other research in a particular economy.
Demerits of Quantitative Methods
Despite their advantages, econometrics and quantitative technique have certain shortcomings. First, quantitative methods are likely to miss contextual details. The quantitative technique is rigid in the sense that it employs inflexible mathematical formulas in the process of making economics discoveries. The results obtained from quantitative methods provide scanty details on non-quantitative aspects such as behavior, motivation, and attitude. Consequently, when an economic researcher over-relies on a quantitative method of research, the researcher may end up collecting data that are rather narrow and superficial. Further, the use of standard questions while employing the quantitative technique of data collection may result in structural bias and, hence, a false representation of the fact, because outcomes may reflect the views of a researcher instead the objective view of the subject being investigated. For example, when quantitative methods are employed to study human behavior, the total control of all variables is not possible due to the complex nature of human beings. Quantitative methods more often than not generate banal and trivial outcomes of little or no value because of controlling variables (Ashley 54). The objectivity of quantitative methodology is jeopardized because a researcher may be selective in choosing an issue to investigate and interpret. The quantitative technique uses sample statistics to make a conclusion on the population parameters; as a result, in the process of generalization, unique characteristics of individual members in the population are overlooked. Since quantitative methods entail the quantification of variables, this methodology may be end to itself rather than a means to the end. The unique aspects of human beings, such as the ability to interpret experience and construct meaning, are overlooked in quantitative methods. In addition, given the level of control exercised in using this approach, the quantitative technique provides laboratory results rather than real world results. Finally, quantitative methods are limiting in nature because they offer a numerical description as opposed to an elaborate narration of the human perception.
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In conclusion, quantitative methods are of great significance in economic research. The merits of this technique outweigh its disadvantages. However, economists should exercise caution when using quantitative methods in economic research in order to avoid pitfalls associated with these approaches, such as subjectivity because of bias in selecting the variables and quantifications that can be an end to themselves rather than being a means to the end.