Research methods are crucial to test hypotheses, develop theories, and drive results. The economic research methods can vary in their objective, methodology, end objective, and the way the entire research is conducted. Hence this leads to several types of economic research methods. Some of the prominent industrial research methods are:
In this type of research, the researcher has to do most of the groundwork from scratch. Data in raw form is collected from primary sources and then processed. Since this method involves direct contact between the researcher and the subject matter, such economic research methods are considered to be sounder and bias-free in terms of their analysis and predictions as the primary so collected is free form adulteration.
However, since data is collected from primary sources, primary research is generally very time consuming and exhaustive. In some cases, primary research methods are discouraged as the primary information is only time or satisfied constraint specific. This reduces the effectiveness of the primary research method. In some cases, the initial research results are found to be applicable for a short duration of time. Like any other method, the primary research method in economics has its pros and cons and should be implemented after due diligence.
In this type of economic research method, the data is collected from secondary sources like the internet, previous results, journals, etc. As the information is received from secondary sources, the data is generally processed and more natural to analyze. Secondary research results can span a longer time as the data analyzed can be for a very long time. Given data collected is from the past, secondary research is used to analyze past findings and develop plans for the future.
On the flip side, in the secondary research method, since the data is collected from secondary resources, there is a high chance of being biased and skewed. Moreover, the data can be manipulated to suit the results. Another argument against secondary research is that it is conducted in a very controlled and measured environment. Hence many times, secondary research gives unsatisfactory results when performed on the field.
Quantitative research methods, as the name suggests, are extensive data-driven. In this type of economic research, the focus is on developing a mathematical model that explains the relationship between various input parameters. In the quantitative type of economic research, mathematical models like hypothesis testing, regression analysis, chi-square test, etc., are extensively used. Regression analysis forms the most critical aspect of a quantitative type of economic research. It helps to establish a mathematical relationship between various input and output variables. Using mathematical tools like co-relation, co-variance, inter-relation, standard deviation, etc., it helps explain the impact of each independent variable on the dependent variable under the given conditions.
Quantitative research methods in economics help establish a relation between quantities like demand and supply, change in volume demanded a product and services if the order is changed, the impact of discounts on consumer behavior, etc. Hence quantitative research methods focus more on the physical aspect and give a data-driven answer. Hence this has some pros and cons. The advantages of being a discreet and data-driven relationship are that it helps determine output in a more optimized manner. On the contrary, some experts say, then it fails to establish the real dynamics between the variables as individual relationships are abstract and can’t be expressed in terms of data. These types of economic research are extensively used in designing macroeconomic policies about employment levels, Gross Domestic Product (GDP), Consumer Price index (CPI), Wholesale price index (WPI), the impact of balance of payments on the reserves, etc.
These types of economic research methods focus more on the qualitative aspects and on developing the underlying notion. The focus is on understanding the intricate relationship between the various parameters. These types of economic research methods use the following tools to achieve their ends:
Interaction with the ordinary person is conducted to understand the undercurrents and the prevalent perception. The main idea of such focused group interviews is to ensure that the participants focus only on the question being asked and hence give an honest opinion. There should not be any manipulation in answers as it would lead to skewed results.
This method is used when the number of participants is huge, and hence it is not possible to conduct focused group interviews. In this method of economic research, it is ensured that a large section of the population is interviewed to ensure that when we take averages, then the bias is removed, and the data is error-free.
These are a form of surveys but conducted in a phased manner, and the questions have limited options. Hence the participants have limited choice to answer, and therefore the data or insights so captured are within certain bounds.
These qualitative methods of economic research have their advantage and disadvantage. The most significant advantage is that it helps in understanding those factors which might not be captured by data or cannot be expressed mathematically. Hence it plays in the psychological aspect of economic analysis and helps in defining the qualitative and abstract elements. On the other hand, the results can be easily influenced by bias, and the halo effect adds other psychological factors. These research methods might be skewed depending upon the research and hence give misleading results. Given that these types of economic research methods are a double-edged sword, they should be used judiciously to ensure that the results are balanced.
Apart from the research mentioned above methods, there are several other economic research methods like hypothesis testing, quality management, null void testing, HHI index testing, etc., which are used for given purposes.
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