Empirical versus Theoretical Economics: A Commoner’s Perspective of the Age Old Debate

1800 Words 8 Pages
This is by no means a paper in Economics and neither is it an “attempt” towards one (as it turns out for me in most cases). This is just a piece where I plan to freely share my opinion on some interesting research problems faced by economists over the evolution of the subject and how we find some striking similarities to them in our daily lives. It is also an opportunity for me to provide my heartiest best wishes and greetings to the organizers of YESM 2013, which is now a regular feature in the calendar of economics students in the city of Kolkata, and perhaps even beyond! One of the major problems that economists and researchers in economics face worldwide is aligning theoretical predictions to behavioral results. It is not uncommon to …show more content…
To them it might all seem a bit out of context and strange to talk about such extravagant expressions. However, this is not very alien to what we all study at an intermediate level by any means. We do come across certain “simplifying” and restrictive assumptions which make our models and comparative statics good to look at and easy to do, respectively but in reality we may often end up finding different results while working with true data. I just chose the inter-temporal consumption problem for expositional clarity and ease of understanding.
Consider our day to day lives. We have to make several such decisions like consuming “today” versus consuming “tomorrow.” It can be regarding anything. Say for example, a person is contemplating buying a new iPad today or postponing it till the next quarter when he expects a rise in his pay. Such decisions over time do matter to us and are frequently happening around us. Every day, we are weighing our present day benefits against the future. Now, suppose our potential ipad buyer suddenly knows that his pay shall increase right from the next month and he won’t have to wait till the next quarter. Then should his decision change? Should he buy the product immediately? Does this new information he acquires influence his decision in any way? If you look at data from various countries, it is absolutely evident that consumption decision over time does depend on information available today. The related issue is referred to

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