Qualitative Methods in Economics

Mirjana Radović-Marković, Beatrice Avolio Alecchi

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781315532233
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Despite numerous books on research methodology, many have failed to present a complete, hands-on, practical book to lead college classes or individuals through the research process. We are seeing more and more scientific papers from all research fields that fail to meet the basic criteria in terms of research methods, as well as the structure, writing style and presentation of results. This book aims to address this gap in the market by providing an authoritative, easy to follow guide to research methods and how to apply them.

Qualitative Methods in Economics is focused not only on the research methods/techniques but also the methodology. The main objective of this book is to discuss qualitative methods and their use in economics and social science research. Chapters identify several of the research approaches commonly used in social studies, from the importance of the role of science through to the techniques of data collection. Using an example research paper to examine the methods used to present the research, the second half of this book breaks down how to present and format your results successfully.

This book will be of use to students and researchers who want to improve their research methods and read up on the new and cutting edge advances in research methods, as well as those who like to study ways to improve the research process.

Part I

Applying qualitative methods

Principles and contributions

1 The role and importance of science

The task of science is partly theoretical – explanation – and partly practical – prediction and technical application. I shall try to show that these two aims are, in a way, two different aspects of one and the same activity.

(Popper, 1972, p. 349)

Science must not be sluggish, providing slow solutions, but it simply has to breathe, monitoring and providing quick solutions in response to the challenges facing global society.

(Radović-Marković, 2012, p. 59)

The importance of science for the development of the economy and society

Science, technology and education are directly responsible for the accumulation of new knowledge and they significantly contribute to the development and progress of human life, the economy and society. This is explained by the fact that science, education and technology are recognized as the key drivers of development, bearing in mind that technological and scientific revolutions generate economic progress (Abraham, 2013). The opinion that science and technology contribute to identifying and a better understanding of the problems facing humanity can also be found elsewhere in the literature. Thomas Kuhn (1970) asserts that science should be understood primarily as a social practice, and only then as an intellectual endeavour. Despite this opinion, one cannot ignore the intellectual contribution of scientific workers in creating new knowledge, which has a positive impact on social and economic progress. This was confirmed in the studies that were conducted by the researchers Schofer, Ramirez and Meyer (2000). Namely, they indicated that the number of scientists and the quality of their training have a direct impact on economic development.

Despite these mentioned findings, in many countries the role of science in economic development is not fully respected by the creators of economic and educational policies. Accordingly, in order to increase the benefits from science, it is necessary to take into account a number of factors. These include primarily the following (Watson, et al. 2002):

a) Investment in training and human resource development: Human resources are the most important element of science. Consequently, scientific education is the key factor in establishing the scientific capacities of any country or region. The European Commission has emphasized the significance of education for acquiring knowledge, which will contribute to developing the skills of the work force for their active participation in the creation of social wealth: ‘What is crucial in the creation of social wealth is that every young person is given the opportunity to use its potential’ (European Commission, 2007, p. 2). Therefore, the creators of the scientific policy in a particular country should focus especially on education, considering that education is highly correlated with the development of science.

b) State policies should encourage and provide the environment for strong scientific institutions: Governments should provide greater financial support to create knowledge, from which they would benefit directly.

c) Increasing the level and quality of information and communication technologies that allow the flow and dissemination of knowledge and information: Creators of the state scientific policy in each country should use the media to raise awareness of the importance and the role of science in society.

Although in many countries science has not been given sufficient attention by economic policy creators, there is a wide consensus among scientists that numerous results in the various fields of the social and natural sciences will solve the most persistent problems in the most effective and fastest way.

This could be also connected to the fact that there is no sustainable economic development without the exchange of new ideas and information, a high level of creativity, and the interaction of science and education with economic subjects through the regional and global scientific network.

(Radović-Marković, 2014, p. 14)

In other words, the development of science in any country not only relies upon the efforts of that nation, but, in addition, the advancement is influenced by international scientific collaboration. With this in mind, it can be concluded that international scientific collaboration represents an important component of a society’s orientation towards the development of scientific achievements. Accordingly, scientific institutions are responsible for raising awareness in a society of the role and value of science. Directly related to this statement, a question arises regarding the new possibilities and modalities of scientific communication that would contribute to improving the dissemination of research results, and thus increase the return of investment in research and development (Radović-Marković, 2014).

Social sciences versus natural sciences

Social sciences deal with the individual or collective behaviour of people or groups of people, companies, economies and societies. They try to determine the existing cause and effect relationships among phenomena in an objective manner, both in specific areas of social life, as well as in society as a whole of all social relations. ‘These sciences can be classified into disciplines such as psychology, the science of human behavior, sociology, the science of social groups, and economy, the science of companies, markets and economies’ (Bhattacherjee, 2012, p. 1). Unlike the social sciences, the natural sciences deal with the examination of natural phenomena, such as matter, the earth, heavenly bodies, or the human body (physics, chemistry, astronomy, medicine, etc.).

There is a significant difference between the natural and social sciences. While in the natural sciences there are certain patterns of relations that occur with such regularity that they are considered principles, such principles do not exist in the social sciences. Namely, unlike the natural sciences that seek universal laws of natural phenomena within nature, the practical application of theoretical models is of particular relevance to the social sciences. This is consistent with the opinion of Adam Smith, the founder of economics, who considered himself more of a philosopher who is constantly looking for opportunities to achieve the prosperity and well-being of people, than a scientist in search of universal economic laws (Jacobs, et al., 2014).

Each of the social sciences, with some minor exceptions, attempts to understand and explain certain aspects of social reality. Economics is sometimes celebrated as the queen of the social sciences, acting as a promoter and driver of the other social sciences (Duhs, 2006). In economic literature, the idea that the economic sciences should follow the other scientific disciplines in their development can often be identified. This primarily refers to the natural sciences and their principles of development.

Theoretical postulates of science

A theory can be defined as a general and, more or less, comprehensive set of statements that describe different aspects of a phenomenon (Babbie, 1998; Hagan, 1993; Senese, 1997). A theory may also represent an attempt to provide an explanation about reality, or provide a way for classifying and describing events and even predict the future of an event (Hagan, 1993).

Each theory consists of the following elements (Radović, 1996):

a) a series of definitions that explain the variables used in a precise manner;

b) a number of assumptions that provide a brief description of the conditions under which a certain theory is applied;

c) one or more hypotheses that are derived from the assumptions on which the theory is based;

d) the hypotheses that can be tested using different techniques.

‘The main purpose of any theory consists in the fact that it should demonstrate how different things are associated with one another’ (Radović, 1996, p. 161). Namely, if one knows what kind of relation is established between the two variables, one can easily find out how one of them will change with the change of the other.

Assumptions also play an important role in the formation of a theory. They most often involve the form of describing and presenting a theory. ‘They can also serve as an indirect test of hypotheses, and they are sometimes in the function of determining the conditions under which a particular theory is expected to be valid’ (Radović, 1996, p. 162).

The economic theory

A theory indicates which parameters are important and how they can be measured. ‘Economics was studied for many years as a theoretical discipline, which was based on a set of qualitative analyses and definitions’ (Radović, 1996, p. 151). However, in order to be able to follow the requirements with which it was faced under the influence of constant changes in the socio-economic environment, economics had to evolve throughout its history and change its development model. This has consequently led to the quantification of economic theory, and as a result the descriptive and historical orientation in economic science gave way to the formalist approach (Radović, 1996). Therefore, nowadays, there is almost no area of research in which quantitative methods and techniques are not present, used either alone or in combination with qualitative methods, thanks to which they can provide answers to a number of theoretical and practical questions. Thus, for example, the Laffer curve shows the relationship between tax rates and tax revenues. The scientist Laffer, after which the curve was named, believed that high tax rates represent the main culprits for the existence of low national savings, low investment and recession. The tax rates are applied to the abscissa, while the tax revenues, which are realized through the application of appropriate tax rates, are assigned to the ordinate. ‘The popularity of the Laffer curve is a result of the fact that you can explain it to anyone in six minutes and then you can talk about it for six months’ (Varian, 1989, p. 4). We have taken it as an example bearing in mind that the Laffer analysis indicates the good and bad sides of an economic theory. The downside of this theory can be seen in the fact that what this theory predicts may happen in real life, but not necessarily.

In many cases, the practice has proved this theory wrong. ‘Following the reduction in tax rates, tax revenues did not increase, what’s more they decreased, which contributed to an increase in the budget deficit’ (Kulić, 2009, p. 46). The positive side of this theory is that it refers to the use of a simple analysis. In addition, it emphasizes the relevant parameters for drawing conclusions, which we would not be able to discern without this theory. Considering that the purpose of every theory is ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of illustrations
• About the authors
• Preface
• Acknowledgements
• PART I Applying qualitative methods: principles and contributions
• PART II Research paper organization and content
• Index