Economics

Merits And Demerits Of Inductive Method In Economics

Merits And Demerits Of  Inductive Method

Inductive method (Inductive Reasoning) is an important method used by the economist for making conclusions on economic phenomena. It involves the process of reasoning from particular facts to the general principles. When compared to deductive method, inductive method is considered to be the more realistic, concrete and accurate method. It helps in future inquiries and acts as a guide for future inquiries. It helps in future investigation through discovery and evidence of general principles.

Under this Inductive method (Inductive Reasoning) the economic phenomena are tested and general conditions are drawn through four stages namely : (a) Observation (b) Formation of hypothesis (c) Generalization and(d) Verification.

Merits And Demerits Of  Inductive Method In Economics

Merits Of  Inductive Method In Economics

 When compared to deductive method, inductive method is considered to be the more realistic, concrete and accurate method. Inductive method secures the following merits:

1. Helps in future inquiries: Inductive method acts as -a guide for future inquiries. It helps in future investigation through discovery and evidence of general principles.

2. More realistic : This method is more realistic as it is based on facts. It explains the facts without any distortion.

3. Concrete and synthetic : This method is more concrete and synthetic since it deals with the subject as a whole without dividing it into various components.

4. Related to time and place : This method helps us to draw generalizations on the basis of a particular historical situation. So the generalization relate to a particular time and place. Therefore there arises no practical difficulty in applying the conclusions for solving certain economic problems.

5. More accurate : This method provides scope for the adoption of statistical methods. Statistical methods are useful for studying matters relating to national income, inflation, savings and investment. The conclusions drawn from such methods are more accurate.

6. Valuable to Government: This method is of great value to the ,Government . The government by adopting this method, can solve complex economic problems.

7. Dynamic method: This method involves observation) and analysis of facts from historical origin. As economic phenomena vary according to time, their nature, causes and effects can be effectively studied under this method. Hence this method is described as dynamic one.

8. Complimentary : This method is considered as a complimentary to the deductive analysis of economic phenomena. The conclusions drawn by deductive method can be verified by this method. This helps us to get accurate and definite information regarding economic phenomena.

Demerits Of  Inductive Method

Economists like Colin Clark, R. Cohen and E. Nagel criticized this method on the following pounds. They pointed out that this method has the following demerits:

1. Misuse and this —interpretation : Inductive method depends to a great extent on statistical data for analyzing the economic phenomena. This may lead to the misuse and misinterpretation of statistical data,

2. Lacks concreteness : The definitions, sources and methods (used in the statistical approach of this method) differ from investigator to investigator regarding a particular economic phenomenon. For instance different techniques are used by the investigators for calculating the national income of a country. So the statistical techniques used in this method lack concreteness.

3. Not certain : The conclusions drawn from this method are not certain. As Bouldings pointed out that statistical information can only give us .propositions whose truth is more or less probable. It never gives us certainty.

4. Delay and costly affair : This method involves a detailed process of collection, classification, analysis and interpretation of data. It also requires the services of expert statistical investigators and analysts. Therefore, this method causes delay. It requires huge expenditure.

5. Hasty conclusions : This method provides scope for hasty conclusions based on inadequate and incorrect facts. Sometimes important facts are ignored and the conclusions may be unwarranted.

6. Limited applicability : Observation and experimentation are employed in this method. But as Economics is concerned with human behavior, it is not completely possible to predict the behavior of individuals at all times. So the conclusions drawn by this method have limited applicability.

7. Investigator’s talents doubtful : The success of this method for finding conclusions on economic phenomena depends to a great extent on the talents, capacity and intelligence of the investigators. If the investigators lack initiative and statistical knowledge, then this method is of no use.

8. One side method : Inductive method, in the absence of deductive method is a one side view of economic phenomena. We get partial, inadequate and incomplete conclusions, if we follow this method only. So this method must be supplemented by deductive method.

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