What is quantitative economics? All you need to know

Research Steps in Quantitative Economics

Quantification of Economic Variables

Economic and social variables need to be quantified numerically. A large number of variables can be quantified directly without the use of proxy variables. Population, for instance, can be directly quantified by asking the number of people in a family or a firm. Other variables such as lifestyle cannot be directly quantified and proxy variables or asking indirect questions such as income, number of work hours per week, consumption, and expenditure has to be used. For economists to have the best results, they need to reduce the number of indirect questions (proxy variables). By asking direct questions, the researcher can get the best results.

Fixing the Sample Size

For high precision of results, economists need to have the correct sample size. The size of a sample will depend on the costliness of errors and the costliness of sampling. A sample needs to account for different classes of people in the study region. In most cases, economists calculate the standard deviation of a population to determine the sample size. In some cases, researchers consider time and cost. When resources are available, the sample size can be significant.

Collection of Data

Here, the economists collect data using different methods including interviews, questionnaires, and surveys among others. The economist has to ensure that they get correct data by asking the right questions to get the proper responses. Economists also need to ensure that as much as possible they get primary data, directly from the correspondents.

Analysis of Data

This is where an economist takes the collected data and uses it to create frequency distribution tables, graphs, and other statistical tools. During analysis, the data is condensed into some form of ranking before its characteristics are studied. It is from the analysis that economists deduce the attributes of different sets of data.

What can Graduates of Quantitative Economics Major do?

Countless quantitative economics job is available for graduates. This field of economics is concerned with how scarce resources are utilized in the production, distribution, and use of goods and services. Economists will study issues such as unemployment and inflation. They will analyze institutions such as banks, the government, stock markets and they look at issues connected with labor, taxes, urban development, and environmental issues.

Graduates are involved in:

• Development of budgets
• Performing cost analysis and price projections
• Preparing financial statements and reports
• Test the impact of policies
• Advise creditors on whom to loan
• Develop interest rates for creditors

Most quantitative economics work for private and government firms, but some offer freelance services. These economists are employed as forecast analysts, economic analyst, advisers, and investment bankers. Some economists go to law school where they study the economics of law. Career options in this field include:

• Financial analyst
• Internal auditor
• Economic forecaster
• Benefits analyst
• Portfolio administrator

What Affects Quantitative Economics Results

Quantitative data can be measured and expressed numerically as quantitative economics help would have it. With such data, economists seek to answer the questions 'how many?' and 'how much.' By using a large sample size, they can determine the level of occurrence of a given phenomenon and, thereby, give final recommendations or predict future trends.

Unlike qualitative economics, which is unstructured and subjective, the results in a quantitative economics study can be wrong if the data collected is wrong. The main issue affecting economists is the high number of variables affecting a single phenomenon in a study. For instance, when studying lifestyle, an economist might need to consider income, expenditure, working hours, shopping habits, cost of living, number of children and many more. Some variables may be forgotten, and others are not easy to determine directly, and as such, complicated questions are used.