Research Methods in

Economics
By: Haile Girma (Ass. Prof.)
Department of Economics, SLU
Email: [email protected]
 Chapter 2:Formulation of Research Problem and
hypothesis
2.1. Defining the Research Problem
 A research problem, in general, refers to some difficulty which a
researcher experiences in the context of either theoretical or
practical situation and wants to obtain solution.
 Thus, research problem is one which requires a researcher to
find out best solution for given problem, i.e., to find out by
which course of action, the objective can be attained optimally in
the context of a given environment.
 Defining research problem is foundation of any research method.
 It is one of the first statements defining the research area which
include a quick outline of how hypothesis is arrived at
 When doing research, you should think on what caused the need to
conduct the research (problem identification).
 Technique of Defining a Problem
 The research problem should be defined in systematic manner.
 The technique involved in defining a research problem has a
number of steps, which should be under taken one after an other:-
1. Statement of problem in a general way: First of all the problem
should be stated in a broad general way keeping with some
practical, scientific and intellectual interest. For that purpose
the researcher must immerse completely in the subject matter,
which s/he wishes to pose a problem. In social science it is
advisable to do some field observation and / or preliminary
survey (pilot survey). Then the researcher can him/herself state
the problem or can seek guidance of the subject expert.
 Cont’d
2. Understanding the nature of the problem: the next step is to
understand clearly the nature and the origin of the problem.
 The best way of understanding the problem is:
o To discuss with those who first raised the problem in order to know
how the problem originally come in view.
o To discuss it with those who have a good knowledge of the
problem concerned or similar other problem.
 Cont’d
3. Survey the available literature. All available literatures
concerning the problem must be studied and examined before
defining research problem.
 This means
a) the researcher must be familiar with relevant theory in the
area
Theory has got the following role in overall research studies:-
o Theory provides patterns of the interpretation of data
o It links on study with the other
o It supplies frameworks within which concepts and variables
acquire special significance.
o It allows us interpret the large meaning of our findings for
ourselves and others
 Cont’d
b) the researcher must be familiar with Reports and records and
other literature in the concerned area
c) the researcher must be familiar with research works
undertaken on related problem. This is important especially to
learn what data and other material have been used and are
available for operational purpose
 Knowledge about these all will help the researcher to narrow the
problem down himself.
 Cont’d
 Generally, survey literature will enable researcher to know :-
i. If there are certain gap in the theory
ii. Whether the existing theory applicable to the problem and
consistent with each other.
iii. Whether the findings of the research do or do not follow a
pattern consistent with the theoretical expectation.
iv. Study on a related problem is also useful for indicating the type
of difficulty that may be encountered in the present study.
 Cont’d
4. Developing ideas through discussion: Discussion on a problem
produces useful information. Various new ideas can be discovered
and developed through it. The researcher should discuss his
problem with colleagues and others who have enough experience
in the same area. Such practice is called ‘experience survey”.
Peoples with rich experience are in a position to show the
researcher different aspects of his proposed study and their advice
and comments are usually of high values.
5. Rephrasing the research problem (reformulation of the
problem): Finally the researcher at this stage should be able to
reformulate the problem that has been stated in broad and general
way in to working proposition.
 cont’d
 The researcher should narrow and break down the problem into
its components variables and relationship.
 That is, problem should be expressed as:
i. a relationship between two or more variable
ii. the problem should be stated either in question form or
hypothesis form
 Question form is appropriate mostly when the research is
descriptive in nature. What important is that when a researcher
state the problem in question form the formulated problem should
be free from ambiguity and the relationship among variables
should be clearly expressed
 E.g., Does a relationship exist between income of university
students and score on their exams?
 Cont’d
 In addition, the following points must also be observed while
defining a research problem:
a. Technical terms and words or phrases, with special meanings
used in the statement of the problem, should be clearly defined
(effects , causes, impact, determinants, contributions…)
b. Basic assumptions/expectations or postulates relating to the
research problem should be clearly stated.
c. Suitability of time-period and sources of data available must be
considered by the researcher in defining the problem.
d. scope of investigation within which the problem is to be studied
must be mentioned explicitly in defining a research problem
 There is a common say in research that “The problem clearly
stated is a problem half solved”.
 2.1.1 Source of Research Problem
a. Theory of one’s own interest
b. daily problems
c. technological changes
d. unexplored areas
e. discussions with other people
f. Experience :– problem in practice that remains unsolved
g. Literatures:- key research journals and articles may suggest areas for
further study and Books that summarize research on specific topic
h. Social issues, for instance, issues related to economic and non-
economic activities
i. Ideas from External Sources such as direct suggestions- from instructor,
employer, funding source and brainstorming – every member
contributes ideas and then each must support selected topic.
 2.1.2 Criteria of a good Research Problem
 The criteria can be both external and personal.
a) Novelty (Is the problem new?)
 It should be sufficiently original so that it does not involve
objectionable duplication.
 The study should employ the most recent data.
 There is a constant need for verification of findings of previous
investigations, using newer and better devices and procedures.

b) Interesting
 The problem should be interesting for the investigator himself.
 His interest should be purely intellectual and should not be only
for a reward and material benefit but also advancement in
position, increased authority, etc.
 Cont’d
c) Importance
 it should be worthwhile, adds to knowledge and lead to
improvements in the current practices.
d) Immediate Application
 The investigator should ask himself a question, “will my research
help in solving an urgent problem”. It should be applicable!
e) Feasibility or Amenability
 The suitability of the problem for a particular research worker is
the matter of its feasibility.
 The investigator should possess the required competence,
knowledge and understanding.
 He should be skillful enough to develop, administer, and
interpret the necessary data gathering devices and procedures etc.
 Cont’d
 Feasibility issue of research includes the following:-
a) Availability of data
b) Availability of cooperation
c) Availability of guidance
d) Availability of other facilities
e) Experience and creativity
f) Coverage and confidence
 Cont’d
f) the problem should be researchable?
 Some problems cannot be effectively solved through the process
of research. Particularly, research cannot provide answers to
philosophical and ethical questions that do not show the
relationship existing between two or more variable vividly.
 Therefore, the problem must be stated in workable research
question that can be answered empirically.
 2.1.3 Selecting and Formulating the Problem
2.1.3.1. Selecting the Problem
 The research problem undertaken for study must be carefully
selected.
 A problem must spring from the researcher’s mind like a plant
springing from its own seed (personal interest is mandatory)
 Thus, research guide can at most only help researcher choose
subject.
 The following points may be observed by a researcher in
selecting a research problem :
(i) Subject which is overdone (repeatedly worked area) shouldn’t be
normally chosen.
(ii) Controversial subject shouldn’t become choice of average
researcher.
 Cont’d
III. Too narrow or too vague/unclear problems should be avoided.
IV. The subject selected for research should be familiar and feasible,
therefore it can be easily understandable by everyone
V. The importance of the subject, the qualifications and training
of a researcher, the costs and the time must be considered
 2.1.3.2 Formulation of the problem
 Necessary Conditions for Formulating a Research Problem:-
a) Study of Relevant Literature on the Subject
 This would help to know if there are certain gaps in the theories
 Whether the prevailing theories applicable to the problem
b) Discussions with persons having rich practical experience in
the field of study
 This is often known as an experience survey.
 These people help in sharpening the focus of attention on specific
aspects within the field.
Common Errors in Formulating Research Problem
a. Naming a Broad Field
 To choose the broad area of study instead of specific problem
makes no justification.
b. Narrowing or Localizing a Topic
 The problem should not be narrowed to such an extent that it
becomes too small and insignificant from research point of view.
It should be somewhat on the average
 2.5. Research Hypothesis
 It is tentative/uncertain assumption drawn from knowledge
and theory which is used as a guide in investigation of other
facts.
 Normally the hypothesis is drawn by the researcher himself
E.g. “The determinants of deforestation in W/Jarso Woreda”
Ho = the price of electricity is the major determinants of
deforestation in W/Jarso
 Hypothesis leads to research design, collection and analysis of
data.
 Just as well developed goals guide your plan of care and
evaluation of outcomes, the hypothesis guides your research
plan and the evaluation of its results.
 Cont’d
Workable/applicable hypothesis:-
 It states the predicted relationship between at least 2 testable
variables
1. independent variable(x) = the presumed cause or influence
2. dependent variable(y) = the criterion or the effect variable
 Y=f(x), where x and y are two testable variables - In this case
x affects y.
 Importance of Hypothesis
a) It provides direction to research.
b) It defines what is relevant and what is irrelevant. Thus it
prevents the irrelevant literature and the collection of useless or
excess data.
c) It sensitizes the investigator to certain aspects of situations
which are relevant from the stand point of the problem in hand.
d) It is a guide to thinking process and the process of discovery.
e) It places clear and specific goals. These clear and specific goals
provide the investigator with a basis for selecting samples and
research procedures to meet these goals.
 Types of Hypotheses
1. Simple v/s Complex
 Simple hypothesis contains one independent variable and
one dependent variable
E.g.
 Salary = f(experience)
 class absenteeism= f( transportation accessibility)
 import demand=f(national income(GDP))
 Complex (multivariate) hypothesis predicts the relationship
between 3 or more variables
E.g.
 Economic growth =f(FDI, Export, Pop’n Growth)
 Cont’d
2. Directional v/s Non-Directional Hypothesis
 Directional tells the reader the direction of the relationship
between two variables.
E.g.
 saving causes economic growth
 Non-Directional Hypothesis does not specify the nature of the
relationship between the variables.
Example, family planning education and family size
 Generally, the directional hypothesis is preferred as it forces the
researcher to think critically.
 2.5.1 Characteristics of usable Hypothesis
 The entire hypotheses which are developed cannot be used
 There are some usable hypotheses while the others are not
 The characteristics of usable hypothesis are as under:
1. Conceptual clearness
 It should be clearly defined and definitions should be given which
are commonly acceptable and communicable.
2. It should be capable of being tested
 It is essential that the researcher may undertake some prior study
to ensure that his hypothesis can be tested.
 By a testable hypothesis we mean that from its other deductions
can be made, which can be established or refuted by
observation.
 Cont’d
3. Should be easily understandable
 Very simple terms should be used.
 To the extent possible it should be consistent with the known facts.
4. Should have empirical references
 The concepts in the hypothesis must have empirical correspondence
 All the concepts which express attitudes should be analysed
5. It must be specific
 In other words, all the operations and predictions indicated in the
hypothesis must be clearly spelled out.
 It is better if for making the hypothesis specific, that is divided into
sub-hypothesis
 because it becomes easy to clarify the relationship between the data
sought and conclusions drawn on the one hand
 Cont’d
6. It should be related to available techniques
 A usable hypothesis can be related to available techniques.
 It is because theory and methods cannot be opposite to each other
 One who knows what techniques are available to test his
hypothesis can properly formulate usable questions.
7. It should be related to body of theory
 Usually a student is tempted to do some research on an interesting
subject without finding out whether the research will really help
to refute or support any existing theory of social relations.
 No subject can develop without building on an existing body
of facts and theory.
 2.5.2 Difficulties in Formulating Hypothesis
 the following are difficulties in formulating hypothesis:-
1. Lack of knowledge and clarity of the theoretical frame work
of the area.
2. Lack of ability to make use of the theoretical frame work
logically.
3. Lack of acquaintance with available research techniques.
 Example of Hypothesis

Political participation Increases With education

1st variable (dependent variable) relationship 2nd variable (independent variable)

 R 2
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