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 and deductive method. 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 proceeds from the general to the particular, inductive method proceeds from particular to the general. The supporters of this method start at first with a few indisputable facts about human nature. Deductive method 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.
Merits And Demerits Of Deductive Method
Merits of Deductive Method : The following merits are found in the deductive method
1. Nearer to reality : Deductive method is nearer to reality. It helps us to make deductions from the complex conditions of the world. It also helps us to grasp the realities of the economic system.
2. Simple : Deductive method is very simple in nature. It avoids the collection of statistical data and information for proving economic laws. It helps us to draw conclusions from the accepted generalizations.
3. Analytical: This method is useful for analyzing complex economic phenomena. It divides a particular economic problem into several components.
4. Universal validity : The inferences adopted and the conclusions made under this method have universal validity. The reason is that the inferences are based on certain general principles.
5. Indispensable : This method is regarded as an indispensable method in Economics. As Gide and Rist pointed out “In a science like Political Economy experiment is practically impossible. Abstraction and analysis afford the only means of escape from those other influences which complicate the problem so much”.
6. Exactness and clarity: Deductive method is based on logical reasoning. It helps us to arrive at exact conclusions because its assumptions are definite, clear and true.
7.Reveals inconsistencies : This method provides scope for adopting mathematical approach for arriving conclusions. So it reveals the inconsistencies in the economic phenomena.
8. Powerful method : This method is considered as a powerful method for analyzing the economic phenomena. It is used for deducing conclusions from certain facts.
9. More reliability : In Economics it is difficult to prove certain generalizations through controlled experiments. This is due to the fact that economic phenomena are related to human behavior which varies continuously. In such a condition this method is more reliable for deducing conclusions.
Demerits of Deductive Method :
1. Based on wrong assumptions : Deductive method is based on certain assumptions. But the assumptions may not be real at all times. So the conclusions based on these assumptions may not be real. For instance, this method assumes that individuals behave in a rational manner. But no one can definitely say when individuals behave rationally. Hence this method is based on assumptions which may be wrong at sometimes.
2. Universal applicability – a myth : The statement that deductive method has universal applicability is not real. Because the causes and conclusions of economic problems differ from country to country and from time to time. That is why Professor Lerner criticized that this method is simply an ‘arm chair analysis’ which can’t be regarded as universal
3. Inadequate, data : The followers of this method adopted it on the basis of inadequate data. So the conditions arrived from the assumption, were full of inconsistencies.
4. Generalizations – full of faults : The proposers of this wrongly assumed that their abstractions always correspond with the facts. So any research scholar commits the same mistake if he tries to deduce faulty generalizations.
5. Excessively abstract : This method assumes that Economists possess special skill and knowledge. for drawing inference from various assumptions. This makes them proud and negligent in their research job.
6. Makes economics dogmatic : This method makes Economics dogmatic as it refuses to admit that there can be some defects on the assumptions.
7. Practically dangerous: The Government and the people have to face several problems and dangers as the generalizations of this method are based on wrong or imperfect assumptions.
8. Difficulty in testing the conclusions : This method make difficult to test the validity of conclusions. The conclusions drawn under this method are neither feasible nor practicable.