Quantitative economics is a specialty of its own within the field. It uses a range of complex mathematical and statistical procedures to analyze economic phenomena. These techniques help economic analysts explain economic issues, as well as predict future economic conditions. They also lend quantitative, empirical support to economic theories, which are generally expressed in qualitative terms.
Identification
The field of quantitative economics is known among economists as econometrics, which literally means economic measurement.
Types
The main analytical method of quantitative economics is regression analysis, which studies economic outcomes as functions of one or more predictor variables. For example, a regression equation might analyze the extent to which average income is predicted by the following predictor variables: experience, education, gender and ethnicity. Other quantitative economic techniques include cost-benefit analysis and economic forecasting.
Features
Quantitative economic methods require an in-depth knowledge of statistics and research methodologies. They also require extensive amounts of data, as well as a computer and statistical software for analysis.
Benefits
Quantitative economics not only lends empirical support to economic theory, but also can forecast economic conditions, evaluate the impact of economic policies, examine the feasibility of government or business decisions, and analyze market conditions for business.
Considerations
Quantitative economic techniques can find correlations between variables, such as income and education, but do not prove causation.
