Every science consists of certain laws and principles. These laws and principles are formed on the basis of certain methods. These methods are of two types, namely inductive method (inductive reasoning) and deductive method (deductive reasoning). Economists used the two methods for studying the validity and applicability of the various laws and principles of Economics.
The two methods are needed for knowing the exactness and definiteness in the applicability of economic laws. While the deductive method (deductive reasoning) proceeds from the general to the particular, inductive method (inductive reasoning) proceeds from particular to the general. The Deductive Method (deductive reasoning) is analyzed as below-
Deductive Method (deductive reasoning) : Gee Wilson, in his book “Social Science Research Methods” defined deductive method (deductive reasoning) as the logic of inference from the general to the particular or from universal to the individual. This method was used by several economists like Adam Smith, Ricardo, N.W. Senior, J.S. Mill, Cairnes, Robbins etc. But Ricardo was regarded as the first economist who adopted this method for investigating into the economic phenomena. Ricardo assumed that human activities are influenced by monetary factors. In modern times Robbins used this method with a different approach. Deductive method (deductive reasoning) is also known as Priori method, Abstract method and Analytical method.
The supporters of this deductive reasoning start at first with a few indisputable facts about human nature. They observe a particular economic phenomena through general prepositions with rational thinking and familiarity. They inquire into the economic phenomena on the basis of certain assumptions as given below-
1 ) individuals are selfish in their outlook.
2) Individuals wish to achieve maximum satisfaction with minimum efforts,
3) Increase in population is greater than the increase in the means of subsistence
4) The Land is subject to the Law of Diminishing Returns, the Law of Demand„ the Law of Consumers Surplus, the Law of Malthusian Theory of Population etc. are developed on the basis of deductive reasoning.
Mathematical and non-mathematical methods : Deductive method (deductive reasoning) is of two types, namely, Mathematical and Non-Mathematical methods. The classical economists followed the non-mathematical method. The modern economists like Edgeworth, Pareto and Cournot adopted the mathematical approach. Of late, the mathematical approach is being used by the economists for investigating into the economic phenomena.