Lesson 5

• When analysing markets, a range of assumptions are made about the rationality of economic agents involved in the transactions
• The Wealth of Nations was written

  1776
• Rational


  (in classical economic theory) economic agents are able to consider the outcome of their choices and recognise the net benefits of each one
• Rational agents will select the choice which presents the highest benefits
• Consumers act rationally by


  Maximising their utility
• Producers act rationally by


  Selling goods/services in a way that maximises their profits
• Workers act rationally by


  Balancing welfare at work with consideration of both pay and benefits
• Governments act rationally by


  Placing the interests of the people they serve first in order to maximise their welfare
• Groups assumed to act rationally


  • Consumers
  • Producers
  • Workers
  • Governments
• Rationality in classical economic theory is a flawed assumption as people usually don't act rationally
• If you add up marginal utility for each unit you get total utility
• Qualitative data analysis


  Process of analyzing non-numerical data to understand concepts, opinions and experiences
• Qualitative data analysis process


  1. Judge the value of the data

  2. Interpret the data to gain understanding

  3. Undertake the mechanical process of analyzing the data
• Qualitative data analysis methods

  • Grounded theory
  • Phenomenology
  • Content analysis
  • Discourse analysis
• Grounded theory


  • Researcher goes back and forth between data collection and analysis
  • Researcher makes assumptions about the rationality of economic agents
• Content analysis


  • Researcher systematically codes specific characteristics within the text
  • Can be used for open-ended questions in large quantitative surveys
• Discourse analysis


  • Looks at patterns of speech, such as how people talk about a subject, what metaphors they use, how they take turns in conversation
• Computers can help alleviate time-consuming and monotonous tasks in qualitative data analysis
• Advantages of using computers for qualitative data analysis


  • Helps with cutting, pasting and retrieval of data
  • Useful for tight deadlines
  • Can cope with multiple and overlapping codes
  • Can conduct complex searches
  • Can pick out missed instances of pre-defined categories
  • Can help overcome 'analysis block'
• Disadvantages of using computers for qualitative data analysis

  • Cannot recognize important sequence of events in focus groups
  • Cannot understand the meaning of text
  • Cannot substitute for the intellectual processes of the researcher
  • Cannot recognize changes in participant opinions
  • Software may be beyond individual's budget
  • Can lead to over-emphasis on mechanical procedures
• Quantitative data analysis


  Process of analyzing numerical data to describe, explain, predict or control phenomena
• Quantitative data analysis


  • Requires well-designed and well-executed survey
  • Can use computing software like SPSS
  • Can use basic statistical techniques like frequency counts and univariate analysis
  • Can explore connections between variables through bivariate and multivariate analysis
• Nominal scale


  Respondent chooses from mutually exclusive answers
• Ordinal scale


  Answers form a continuum where some categories are better than others, but the difference between categories cannot be precisely measured
• Interval scale


  Answers are numbers with precisely defined intervals, allowing for precise comparisons
• Arithmetic mean


  Simple average calculated by adding up values and dividing by the number of items
• Mode


  The most frequently occurring value, used with nominal scales
• Median


  The middle value of the range, used with ordinal and interval scales