7 junio, 2024

Descriptive economics: concept, characteristics, instruments, examples

We explain what descriptive economics is, its characteristics, instruments, objectives and we give several examples.

What is descriptive economics?

Descriptive economics is a branch that is responsible for studying reality in order to describe how the economy works. Its main objective is the description of the economic data at a given time to reflect as accurately as possible the real situation.

This branch is part of the positive economy. With the data described, experts try to explain economic phenomena in order to find laws and promulgate theories. Likewise, it takes into account the antecedents and consequences of each of these phenomena.

Experts in descriptive economics do their work using the scientific method. This implies putting aside their personal ideas and moral judgments about the reality they are studying. In this way, its objective is to offer an objective vision of the different economic variables present in a society.

To achieve its ultimate goal, descriptive economics uses instruments such as statistics. In addition, you also need to use the so-called political economy to be able to study the different economic theories and hypotheses, their development and their historical evolution.

Characteristics of descriptive economics

Part of the positive economy

Descriptive economics forms, together with economic theory, the so-called positive economics. Its function is to observe and describe the behavior of different economic agents.

For its part, economic theory allows us to understand the reasons why economic decisions are made. To do this, it uses the data provided by descriptive economics. Its purpose is to end up formulating general models.

Complexity

Among other things, the task performed by descriptive economics is characterized by its complexity. In its task of describing economic reality, it requires careful observation of the data, classifying and describing it.

Scientific method

Descriptive economics uses the scientific method to develop its descriptions. To begin with, it is based on detailed observation of the economic parameters that you want to study, as well as the rest of the elements (history, legislation, etc.) that are related.

Provides information

This matter provides information based on the observed elements. The interpretation of the elaborated description is essential so that other disciplines of economic science can meet their objectives.

Main approaches

There are various approaches to the work of descriptive economics. This means that researchers use various methods to carry out their work depending on the objectives pursued:

The micro and macroeconomic approaches: both approaches are used to describe the economy that develops in a society at a given time. The main difference is the level of analysis of each of them.
The static and dynamic approaches: The static approach is one that is used when everything studied by economists belongs to the same historical period. In this case, the problem of not being able to establish temporal causal relationships appears. On the other hand, the dynamic approach does allow comparison between different periods and develop a time line.
Conjunctural and structural approach: In the case of the conjunctural approach, the researchers base themselves on the elements present at a given moment. In the structural one, on the contrary, these elements form part of the very economic essence of the place in question.

instruments of the descriptive economics

In addition to offering information to other disciplines, descriptive economics also receives data from several of them, especially political economy.

Political economy

Political economy uses the scientific method to develop hypotheses and verify that they correspond to historical reality. It is about offering preliminary theories that are later contrasted with what is happening.

In this sense, researchers must set aside the ideological component when developing their hypotheses and verifying them.

Descriptive statistics

One of the most valuable instruments for this economic discipline is descriptive statistics. It is a matter whose purpose is to summarize all the characteristics and data of the field that is being studied, in this case of economic reality.

This method becomes the simplest and most efficient way to condense the information and offer it in a clear way so that it can be used by economists.

Goals

The main objective of descriptive economics is to gather all the data related to economic agents and phenomena. To do this, you must collect, describe and classify those elements.

After collecting the information, it is submitted to the scientific method to discover the relationships between all the elements that participate in the economic activity.

positive economy

Descriptive economics is part of another modality of this science called positive economics. Its objective is to study and analyze the origin and consequences of economic phenomena. In this way, it will be possible to know the impact that any change in the variables will produce in the general economy.

Positive economics does not judge the morality of economic elements, but only establishes whether their behavior is adequate to achieve a specific goal.

The data described by descriptive economics are essential to achieve this goal. This information is then analyzed by economic theory professionals to try to extract laws that explain and anticipate the different economic phenomena.

Examples of descriptive economics

1- Since descriptive economics seeks to represent reality, a classic example could be to point out that the price of raw materials in the automobile industry increased by 20% during a specific year.

2- Likewise, it also reflects the evolution of economic phenomena. Thus, it could point out that the aforementioned raw materials have increased in price in the same proportion in the last 3 years.

3- As part of the positive economy, researchers can establish hypotheses that explain a certain economic phenomenon: political tensions in Iraq have caused the price of oil tankers to rise by 30% in the last quarter, which, in turn, time, has caused an increase in unemployment in some countries.

4- Purely descriptive economic indicators are clear examples of this discipline of economic science. Thus, the GDP of each country is usually published, an indicator that measures national production at a given time. Another example could be the Consumer Price Index or all inflation indicators.

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