Most economists subscribe to a belief in “positive economics,” which means that economic theory flows from economic data. Thus, all theory can be tested for ...

Economists develop economic models to explain consistently recurring relationships. Their models link one or more economic variables to other economic variables (see “Economic Models,” p. 8). For ...

Incentives are part of our daily life and can affect everything from what we eat to how we parent our children to how we perform at work. Many everyday incentive behavior is rooted in economic ...

I n the epilogue of their blockbuster book Mostly Harmless Econometrics (2009), Josh Angrist and Steve Pischke write, “If applied econometrics were easy, theorists would do it.” As academic jokes go, ...

There is an old joke in economics about two economists walking together down the sidewalk. One of them stops the other and says, “Look! There’s a $100 bill lying there on the ground!” As he stoops to ...

When gasoline is expensive, people grumble that big oil companies like Chevron and ExxonMobil are colluding to keep prices high. They’re wrong. The best way to understand why businesses aren’t ...

Clay Halton is a Business Editor at Investopedia and has been working in the finance publishing field for more than five years. He also writes and edits personal finance content, with a focus on ...

The Greater Fool Theory involves overpriced securities finding buyers among hopeful investors. Understand its impact on investing and possible risks involved.