Research Methods in Economics

CHAPTER ONE

Definition of research

Research in common parlance refers to a search for knowledge. Once can also define research as
a scientific and systematic search for pertinent information on a specific topic. Research is anart
of scientific investigation.
Advanced Learner’s Dictionary of Current English
“Research is a careful investigation or inquiry especially through search for new facts in any
branch of knowledge.”
Redman and Mory“Research is a systematized effort to gain new knowledge”
Research is a movement, a movement from the known to the unknown. It is actually a voyage of
discovery.

Research is an academic activity, therefore, should be defined technically.

Clifford Woody “ research comprises defining and redefining problems, formulating hypothesis
or suggested solutions; collecting, organising and evaluating data; making deductions and
reaching conclusions; and at last carefully testing the conclusions to determine whether they fit
the formulating hypothesis”.
Research is, thus, an original contribution to the existing stock of knowledge making for its
advancement. It is the pursuit of truth with the help of study, observation, comparison and
experiment. In short, the search for knowledge through objective and systematic method of
finding solution to a problem is research. The systematic approach concerning generalisation and
the formulation of a theory is also research. As such the term ‘research’ refers to the systematic
method.

Objectives of the research

The purpose of research is to discover answers to questions through the application of scientific
procedures. The main aim of research is to find out the truth which is hidden and which has not
been discovered as yet. Though each research study has its own specific purpose, we may think
of research objectives as falling into a number of following broad groupings:
1. To gain familiarity with a phenomenon or to achieve new insights into it (exploratory or
formulativeresearch studies);
2. To portray accurately the characteristics of a particular individual, situation or a group
(descriptiveresearch studies);
3. To determine the frequency with which something occurs or with which it is associated with
something else (diagnostic research studies);
4. To test a hypothesis of a causal relationship between variables (such studies are known
ashypothesis-testing research studies).

Motivations in research
What makes people to undertake research? This is a question of fundamental importance.
Thepossible motives for doing research may be either one or more of the following:
1. Desire to get a research degree along with its consequential benefits;
2. Desire to face the challenge in solving the unsolved problems, i.e., concern over practical
problems initiates research;
3. Desire to get intellectual joy of doing some creative work;
4. Desire to be of service to society;
5. Desire to get respectability

Types of research
The basic types of research are as follows:
i. Descriptive vs. Analytical Research
Descriptive research: -includes surveys and fact-finding enquiriesof different kinds. The major
purpose of descriptive research is description of the state ofaffairs as it exists at present. In social
science and business research it is often calledEx post facto research for descriptive research
studies. In this type of researches, the researcher has no control over the variables; he can only
reportwhat has happened or what is happening. Most ex post facto research projects are used for
descriptive studies in which the researcher seeks to measure such items as, for example,
frequency of shopping, preferences of people, or similar data. The methods of research utilized
in descriptive research are survey methods of all kinds, including comparative and correlational
methods.
Analytical research: - the researcher uses facts or information already available, and
analyzethese to make a critical evaluation of the material.
ii. Applied(action) vs. Fundamental (basic or pure)Research
Applied research:-aims at finding a solution for an immediate problem facing a society or an
industrial/business organization. The central aim of applied research is to discover a solution for
some pressing practical problem. Research aimed at certain conclusions (say, a solution) facing a
concrete social or business problem is an example of applied research or to identify social,
economic or political trends that may affect a particular institution. Eg.marketing research and
evaluation researches

Fundamentalresearch:-is mainly concerned with generalisations and with the formulation of a

theory.
“Gathering knowledge for knowledge’s sake is termed ‘pure’ or ‘basic’ research.”Basic research
is directed towards finding information that has a broad base of applications and thus, adds to the
already existing organized body of scientific knowledge

E.g Research concerning some natural phenomenon or relating to pure mathematics, human
behavior are examples of fundamental research.
iii. Quantitative vs. QualitativeResearches
Quantitative research:- is based on the measurement of quantity or amount. It is applicable to
phenomena that can be expressed in terms of quantity.
Qualitative research:- is concerned with qualitative phenomenon, i.e., phenomena relating to or
involving quality or kind. E.ginvestigating the reasons for human behaviour (i.e., why people
think or do certain things),we quite often talk of ‘Motivation Research’, an important type of
qualitative research. It is specially important in the behavioural sciences where the aim is to
discover theunderlying motives of human behaviour. Through such research we can analyse the
various factors which motivate people to behave in a particular manner or which make people
like or dislike a particular thing.
(iv) Conceptual vs. Empirical
Conceptual research:- is that related to some abstract idea(s) or theory. It is generally used by
philosophers and thinkers to develop new concepts or to reinterpret existing ones.
Empirical research:- relies on experience or observation alone, often without due regard for
system and theory. It is data-based research, coming up with conclusions which are capable of
being verified by observation or experiment. It is also known as experimental type of research. In
such a research it is necessary to get at facts firsthand, at their source, and actively to go about
doing certain things to stimulate the production of desired information. In such a research, the
researcher must first provide himself with a working hypothesis or guess as to the probable
results. He then works to get enough facts (data) to prove or disprove his hypothesis. It is
appropriate when proof is sought that certain variables affect other variables in some way.
Evidence gathered through experiments or empirical studies is today considered to be the most
powerful support possible for a given hypothesis.
(v) Other Types of Research:
one-time research vs. longitudinal research.
One-time research:- is a research confined to a single time-period, whereas longitudinal research
is carried on over several time-periods.
Research can be field-setting research or laboratory research orsimulation research, depending
upon the environment in which it is to be carried out. Research can as well be understood as
clinical or diagnostic research. Such research follow case-study methods or indepth approaches
to reach the basic causal relations. Such studies usually go deep into the causes of things or
events that interest us, using very small samples and very deep probing data gathering devices.
The research may be exploratoryor it may be formalized. The objective of exploratory research
is the development of hypotheses rather than their testing, whereas formalized research studies
are those with substantial structure and with specific hypotheses to be tested. Historical research
is that which utilizes historical sources like documents, remains, etc. to study events or ideas of
the past, including the philosophy of persons and groups at any remote point of time. Research
can also be classified as conclusion-oriented and decision-oriented. While doing conclusion
oriented research, a researcher is free to pick up a problem, redesign the enquiry as he proceeds
and is prepared to conceptualize as he wishes. Decision-oriented research is always for the need
of a decision maker and the researcher in this case is not free to embark upon research according
to his own inclination. Operations research is an example of decision oriented research since it is
a scientific method of providing executive departments with a quantitative basis for decisions
regarding operations under their control.
Research Approaches
There are two basic approaches to research,
1. Quantitative approach and the
2. Qualitative approach.

1. Quantitative Approach:-involves the generation of data in quantitative form which can be

subjected to rigorous quantitative analysis in a formal and rigid fashion. This approach can be
further sub-classified into
 Inferential approach
 experimental approach
 simulation approach

Inferential approach to research is to form a data base from which to infer characteristics or
relationships of population. This usually means survey research where a sample of population is
studied (questioned or observed) to determine its characteristics, and it is then inferred that the
population has the same characteristics.
Experimental approach is characterised by much greater control over the research environment
and in this case some variables are manipulated to observe their effect on other variables.
Simulationapproach involves the construction of an artificial environment within which relevant
information and data can be generated. This permits an observation of the dynamic behaviour of
a system (or its sub-system) under controlled conditions. The term ‘simulation’ in the context of
business and social sciences applications refers to “the operation of a numerical model that
represents the structure of a dynamic process.

2. Qualitative approach:- to research is concerned with subjective assessment of attitudes,

opinions and behavior. Research in such a situation is a function of researcher’s insights and
impressions.
Such an approach to research generates results either in non-quantitative form or in the form
which are not subjected to rigorous quantitative analysis. Generally, the techniques of focus
group interviews, projective techniques and depth interviews are used.
Significance of research
1. Research inculcates scientific and inductive thinking and it promotes the development of
logical habits of thinking and organisation.
2. Research provides the basis for nearly all government policies in our economic system.
3. Research has its special significance in solving various operational and planning problems
of business and industry.
4. Research is equally important for social scientists in studying social relationships and in
seeking answers to various social problems. ..etc
Research Methods vs. Methodology
Research methodsincludes all those methods/techniques that are used for conduction of research.
Research methods or techniques, thus, refer to the methods the researchersuse in performing
research operations. In other words, all those methods which are used by the researcher during
the course of studying his research problem are termed as research methods
Research methods can be put into the following three groups:
1. In the first group we include those methods which are concerned with the collection of data.
These methods will be used where the data already available are not sufficient to arrive at the
required solution;
2. The second group consists of those statistical techniques which are used for establishing
relationships between the data and the unknowns;
3. The third group consists of those methods which are used to evaluate the accuracy of the
results obtained.
Research methods falling in the above stated last two groups are generally taken as the analytical
tools of research.

Research methodology:- is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. In it we study the various
steps that are generally adopted by a researcher in studying his research problem along with the
logic behind them. It is necessary for the researcher to know not only the research
methods/techniques but also the methodology.
E.gResearchers not only need to know how to develop certain indices or tests, how to calculate
the mean, the mode, the median or the standard deviation or chi-square, how to apply particular
research techniques, but they also need to know which of these methods or techniques, are
relevant and which are not, and what would they mean and indicate and why. Researchers also
need to understand the assumptions underlying various techniques and they need to know the
criteria by which they can decide that certain techniques and procedures will be applicable to
certain problems and others will not.

Thus, when we talk of research methodology we not only talk of the research methods but also
consider the logic behind the methods we use in the context of our research study and explain
why we are using a particular method or technique and why we are not using others so that
research results are capable of being evaluated either by the researcher himself or by others.
Why a research study has been undertaken,
how the research problem has been defined, in what way and why the hypothesis has been
formulated,
what data have been collected and what particular method has been adopted, why particular
technique
ofanalysing data has been used and a host of similar other questions are usually answered when
we talk of research methodology concerning a research problem or study.
Research Process
Before embarking on the details of research methodology and techniques, it seems appropriate to
present a brief overview of the research process. Research process consists of series of actions or
steps necessary to effectively carry out research and the desired sequencing of these steps.The
following order concerning various steps provides a useful procedural guideline regarding the
research process:
(1) formulating the research problem; (2) extensive e literature survey; (3) developing the
hypothesis; (4) preparing the research design; (5) determining sample design; (6) collecting the
data; (7) execution of the project; (8) analysis of data; (9) hypothesis testing; (10) generalisations
and interpretation, and (11) preparation of the report or presentation of the results,
i.e., formal write-up of conclusions reached.
1. Formulating the research problem:-There are two types of research problems, viz.,
thosewhich relate to states of nature and those which relate to relationships between variables. At
the very outset the researcher must single out the problem he wants to study, i.e., he must decide
the general area of interest or aspect of a subject-matter that he would like to inquire into.
Initially the problem may be stated in a broad general way and then the ambiguities, if any,
relating to the problem be resolved. Then, the feasibility of a particular solution has to be
considered before a working formulation of the problem can be set up. The formulation of a
general topic into a specific research problem, thus, constitutes the first step in a scientific
enquiry. Essentially two steps are involved in formulating the research problem, viz.,
understanding the problem thoroughly, and rephrasing the same into meaningful terms from an
analytical point of view.

The best way of understanding the problem is to discuss it with one’s own colleagues or with
those having some expertise in the matter. In an academic institution the researcher can seek the
help from a guide who is usually an experienced man and has several research problems in mind.
Often, the guide puts forth the problem in general terms and it is up to the researcher to narrow it
down and phrase the problem in operational terms. In private business units or in governmental
organisations, the problem is usually earmarked by the administrative agencies with whom the
researcher can discuss as to how the problem originally came about and what considerations are
involved in its possible solutions.

2.Extensive literature survey:-Once the problem is formulated, a brief summary of it should be

written down. It is compulsory for a research worker writing a thesis for a Ph.D. degree to write
a synopsis of the topic and submit it to the necessary Committee or the Research Board for
approval. At this juncture the researcher should undertake extensive literature survey connected
with the problem. For this purpose, the abstracting and indexing journals and published or
unpublished bibliographies are the first place to go to. Academic journals, conference
proceedings, government reports, books etc., must be tapped depending on the nature of the
problem. In this process, it should be remembered that one source will lead to another. The
earlier studies, if any, which are similar to the study in hand should be carefully studied. A good
library will be a great help to the researcher at this stage.
3. Development of working hypothesis:-After extensive literature survey, researcher
shouldstate in clear terms the working hypothesis or hypotheses. Working hypothesis is tentative
assumptionmade in order to draw out and test its logical or empirical consequences. As such the
manner inwhich research hypotheses are developed is particularly important since they provide
the focal pointfor research. They also affect the manner in which tests must be conducted in the
analysis of dataand indirectly the quality of data which is required for the analysis. In most types
of research, thedevelopment of working hypothesis plays an important role. Hypothesis should
be very specific andlimited to the piece of research in hand because it has to be tested. The role
of the hypothesis is toguide the researcher by delimiting the area of research and to keep him on
the right track. It sharpenshis thinking and focuses attention on the more important facets of the
problem. It also indicates thetype of data required and the type of methods of data analysis to be
used.
How does one go about developing working hypotheses? The answer is by using the following
approach:
(a) Discussions with colleagues and experts about the problem, its origin and the objectives in
seeking a solution;
(b) Examination of data and records, if available, concerning the problem for possible trends,
peculiarities and other clues;
(c) Review of similar studies in the area or of the studies on similar problems; and
(d) Exploratory personal investigation which involves original field interviews on a limited scale
with interested parties and individuals with a view to secure greater insight into the practical
aspects of the problem.
Thus, working hypotheses arise as a result of a-priori thinking about the subject, examination of
the available data and material including related studies and the counsel of experts and interested
parties.
Working hypotheses are more useful when stated in precise and clearly defined terms. It may as
well be remembered that occasionally we may encounter a problem where we do not need
workinghypotheses, specially in the case of exploratory or formulative researches which do not
aim at testingthe hypothesis. But as a general rule, specification of working hypotheses in
another basic step of theresearch process in most research problems.
4. Preparing the research design: The research problem having been formulated in clear cut
terms, the researcher will be required to prepare a research design, i.e., he will have to state the
conceptual structure within which research would be conducted. The preparation of such a
design facilitates research to be as efficient as possible yielding maximal information. In other
words, the function of research design is to provide for the collection of relevant evidence with
minimal expenditure of effort, time and money. But how all these can be achieved depends
mainly on the research purpose. Research purposes may be grouped into four categories, viz., (i)
Exploration, (ii) Description, (iii) Diagnosis, and (iv) Experimentation. A flexible research
design which provides opportunity for considering many different aspects of a problem is
considered appropriate if the purpose of the research study is that of exploration. But when the
purpose happens to be an accurate description of a situation or of an association between
variables, the suitable design will be one that minimises bias and maximises the reliability of the
data collected and analysed.
There are several research designs, such as, experimental and non-experimental hypothesis
testing. Experimental designs can be either informal designs (such as before-and-after without
control, after-only with control, before-and-after with control) or formal designs (such as
completely randomized design, randomized block design, Latin square design, simple and
complex factorial designs), out of which the researcher must select one for his own project.
The preparation of the research design, appropriate for a particular research problem, involves
usually the consideration of the following:
(i) The means of obtaining the information;
(ii) The availability and skills of the researcher and his staff (if any);
(iii) explanation of the way in which selected means of obtaining information will be organised
and the reasoning leading to the selection;
(iv) The time available for research; and
(v) The cost factor relating to research, i.e., the finance available for the purpose.

5. Determining sample size:-All the items under consideration in any field of inquiry constitute
a ‘universe’ or ‘population’. A complete enumeration of all the items in the ‘population’ is
known as a census inquiry. It can be presumed that in such an inquiry when all the items are
covered no element of chance is left and highest accuracy is obtained. But in practice this may
not be true. Even the slightest element of bias in such an inquiry will get larger and larger as the
number of observations increases. Moreover, there is no way of checking the element of bias or
its extent except through a resurvey or use of sample checks. Besides, this type of inquiry
involves a great deal of time, moneyand energy. Not only this, census inquiry is not possible in
practice under many circumstances. For instance, blood testing is done only on sample basis.
Hence, quite often we select only a few items from the universe for our study purposes. The
items so selected constitute what is technically called a sample.The researcher must decide the
way of selecting a sample or what is popularly known as the sample design. In other words, a
sample design is a definite plan determined before any data are actually collected for obtaining a
sample from a given population.

6. Collecting the data:-In dealing with any real life problem it is often found that data at hand
are inadequate, and hence, it becomes necessary to collect data that are appropriate. There are
several ways of collecting the appropriate data which differ considerably in context of money
costs, time and other resources at the disposal of the researcher. Primary data can be collected
either through experiment or through survey. If the researcher conducts an experiment, he
observes some quantitative measurements, or the data, with the help of which he examines the
truth contained in his hypothesis.

7. Execution of the project:-Execution of the project is a very important step in the research
process. If the execution of the project proceeds on correct lines, the data to be collected would
be adequate and dependable. The researcher should see that the project is executed in a
systematic manner and in time. If the survey is to be conducted by means of structured
questionnaires, data can be readily machine-processed. In such a situation, questions as well as
the possible answers may be coded. If the data are to be collected through interviewers,
arrangements should be made for proper selection and training of the interviewers. The training
may be given with the help of instruction manuals which explain clearly the job of the
interviewers at each step. Occasional field checks should be made to ensure that the interviewers
are doing their assigned job sincerely and efficiently.A careful watch should be kept for
unanticipated factors in order to keep the survey as much realistic as possible. This, in other
words, means that steps should be taken to ensure that the survey is under statistical control so
that the collected information is in accordance with the pre-defined standard of accuracy. If some
of the respondents do not cooperate, some suitable methods should be designed to tackle this
problem. One method of dealing with the non-response problem is to make a list of the non-
respondents and take a small sub-sample of them, and then with the help of experts vigorous
efforts can be made for securing response.

8. Analysis of data :-After the data have been collected, the researcher turns to the task of
analyzing them. The analysis of data requires a number of closely related operations such as
establishment of categories, the application of these categories to raw data through coding,
tabulation and then drawing statistical inferences. The unwieldy data should necessarily be
condensed into a few manageable groups and tables for further analysis. Thus, researcher should
classify the raw data into some purposeful and usable categories. Coding operation is usually
done at this stage through which the categories of data are transformed into symbols that may be
tabulated and counted. Editing is the procedure that improves the quality of the data for coding.
With coding the stage is ready for tabulation. Tabulation is a part of the technical procedure
wherein the classified data are put in the form of tables. The mechanical devices can be made use
of at this juncture. A great deal of data, specially in large inquiries, is tabulated by computers.
Computers not only save time but also make it possible to study large number of variables
affecting a problem simultaneously.

9. Hypothesis testing:- After analysing the data as stated above, the researcher is in a position to
test the hypotheses, if any, he had formulated earlier. Do the facts support the hypotheses or they
happen to be contrary? This is the usual question which should be answered while testing
hypotheses. Various tests, such as Chi square test, t-test, F-test, have been developed by
statisticians for the purpose. The hypotheses may be tested through the use of one or more of
such tests, depending upon the nature and object of research inquiry. Hypothesis-testing will
result in either accepting the hypothesis or in rejecting it. If the researcher had no hypotheses to
start with, generalisations established on the basis of data may be stated as hypotheses to be
tested by subsequent researches in times to come.
10. Generalisations and interpretation:-If a hypothesis is tested and upheld several times, it
may be possible for the researcher to arrive at generalisation, i.e., to build a theory. As a matter
of fact, the real value of research lies in its ability to arrive at certain generalisations. If the
researcher had no hypothesis to start with, he might seek to explain his findings on the basis of
some theory. It is known as interpretation. The process of interpretation may quite often trigger
off new questions which in turn may lead to further researches.
11. Preparation of the report or thesis:-Finally, the researcher has to prepare the report of what
has been done by him. Writing of report must be done with great care keeping in view the
following:
The layout of the report should be as follows: (i) the preliminary pages; (ii) the main text, and
(iii) the end matter.
In its preliminary pages the report should carry title and date followed by acknowledgements and
foreword. Then there should be a table of contents followed by a list of tables and list of graphs
and charts, if any, given in the report.
The main text of the report should have the following parts:
(a) Introduction: It should contain a clear statement of the objective of the research and an
explanation of the methodology adopted in accomplishing the research. The scope of the study
along with various limitations should as well be stated in this part.
(b) Summary of findings: After introduction there would appear a statement of findings and
recommendations in non-technical language. If the findings are extensive, they should be
summarised.
(c) Main report: The main body of the report should be presented in logical sequence and
broken-down into readily identifiable sections.
(d) Conclusion: Towards the end of the main text, researcher should again put down the results
of his research clearly and precisely. In fact, it is the final summing up.
At the end of the report, appendices should be enlisted in respect of all technical data.
Bibliography,
i.e., list of books, journals, reports, etc., consulted, should also be given in the end. Index should
also
be given specially in a published research report.
2. Report should be written in a concise and objective style in simple language avoiding vague
expressions such as ‘it seems,’ ‘there may be’, and the like.
3. Charts and illustrations in the main report should be used only if they present the information
more clearly and forcibly.
4. Calculated ‘confidence limits’ must be mentioned and the various constraints experienced in
conducting research operations may as well be stated.
Criteria of Good Research
One expects scientific research to satisfy the following criteria:
1. The purpose of the research should be clearly defined and common concepts be used.
2. The research procedure used should be described in sufficient detail to permit another
researcher to repeat the research for further advancement, keeping the continuity of what has
already been attained.
3. The procedural design of the research should be carefully planned to yield results that are as
objective as possible.
4. The researcher should report with complete frankness, flaws in procedural design and estimate
their effects upon the findings.
5. The analysis of data should be sufficiently adequate to reveal its significance and the methods
of analysis used should be appropriate. The validity and reliability of the data should be checked
carefully.
6. Conclusions should be confined to those justified by the data of the research and limited to
those for which the data provide an adequate basis.
7. Greater confidence in research is warranted if the researcher is experienced, has a good
reputation in research and is a person of integrity.

In other words, we can state the qualities of a good researchas under:

1. Good research is systematic: It means that research is structured with specified steps to be
taken in a specified sequence in accordance with the well-defined set of rules. Systematic
characteristic of the research does not rule out creative thinking but it certainly does reject the
use of guessing and intuition in arriving at conclusions.
2. Good research is logical: This implies that research is guided by the rules of logicalreasoning
and the logical process of induction and deduction are of great value in carrying out research.
Induction is the process of reasoning from a part to the whole whereas deduction is the process
of reasoning from some premise to a conclusion which follows from that very premise. In fact,
logical reasoning makes research more meaningful in the context of decision making.
3. Good research is empirical: It implies that research is related basically to one or more aspects
of a real situation and deals with concrete data that provides a basis for external validity to
research results.
4. Good research is replicable: This characteristic allows research results to be verified by
replicating the study and thereby building a sound basis for decisions.