Explain the scientific method and why it is difficult to app

Explain the scientific method and why it is difficult to apply to their economy.

Homework 1 Graded Assignment | Back to Assignment 19. Explain the steps of scientific method and why it is difficult to apply to the economy. (Required-10 points possible.)

Solution

The steps involved in scientific method are:
1. Identifying a problem: The problem which needs to be studied has to be well defined
2. Gathering data: This step involves gathering a massive amount of data in order to study the existing pattern, trend so that an accurate predictable relationship can be established between dependent and independent variable
3. Forming a hypotheses: Here a model needs to be defined which would be used to carry out a prediction
4. Testing the hypothesis: This is a crucial step as in order to interpret the result accurately, the correct test needs to be identified.
5. Analysing the results: Analysing involves proper presentation of data which would help to understand the model better

Some of the issues of applying the scientific method in Economics:
1. Generating a mathematical model in Economics needs to gather lot of data and identifying independent variables needs experience
2. The model in reality not only depends on maths based science but also depends on the psychological behaviour of the consumer where in the model might not be able to predict properly
3. The economics assumes that the consumer is a rational buyer which may not be true all the time
4. The model might not be accurate if external forces like influence of foreign trade.
5. With the introduction of new alternatives, the predicted demand for a good might get changed
6. The factors like trend, seasonality, weather have significant influence on prediction
7. The improper selection of tests might be able to interpret the results properly
8. The changes in fiscal and monetary policies have significant influences on prediction process