# What are Inductive and Deductive Methods Applied to Economics? – Examples

The inductive method, is a reasoning method, this is based on the logic of induction, part of the particular hypothesis to make general conclusions of an investigation. The inductive method works by making total generalizations, relying on the specific observations of a work or investigation. It is done in this way because, the particular hypothesis is the one that transmits information to be able to reach a conclusion on a topic.

The inductive method is characterized by being a very broad method, that is, they seek very precise and extensive conclusions. This is a method that uses creativity and allows people to come up with innovative conclusions. This type of conclusion is usually given in terms of probabilities since it is a vital hypothesis. This method is mostly in large and powerful companies.

The deductive method is a reasoning method that is used to deduce as its name says, possible and / or logical conclusions of a work, based on a series of hypotheses. Taking this concept into account, it is a process that is carried out and thought from general conclusions to particular conclusions.

In the deductive method, all the conclusions have to be more than precise, they must be exact, so all the hypotheses and premises that are used must be real. In other words, a conclusion varies according to the validity of hypotheses taken as bases. This method is used to break even in a company.

## Inductive method types

There are two types of inductive methods, although their concept is short, they greatly influence the time or the moment of drawing a conclusion:

• Complete inductive method: The conclusion derived from this type must go much further of the base data.
• Incomplete inductive method: A single key reasoning is drawn and it is not necessary to go so deep.

## Types of deductive method

There are two types of deductive methods, although their concept is simple, they influence when drawing a key conclusion:

• Direct: The conclusion is made starting from a single hypothesis.
• Indirect: It is done two or more conclusions, and then join them and arrive at the same.

## Characteristics of the inductive and deductive method

The methods have things that differentiate them from each other, that is characteristics that make them different. Those characteristics are:

### Inductive method

• Can motivate To authentic studies, these methods are important since they motivate people, so they could motivate to carry out new studies.
• The conclusions are not necessarily true, inductive method conclusions are unreliable, that is to say that they are probable but they are not certain or exact.
• They are carried out after specific processes, this method lacks that people make thoughts about all the possible scenarios in which a conclusion can be given.
• It is an investigation worldwide used by scientists.
• It is used as part of a business plan.

### Deductive method

• Everything is done from the general to reach the particular.
• Used in everyday life, many times this method is used and / or used by people around us, even by ourselves. I deduce that …
• Works with the foundations of logic.
• It is not based on experimentation.
• Transformational leaders use it a lot in companies.
• It is systematic. This is because the deductive method uses very well defined processes.

## Steps of inductive and deductive methods

Steps must be followed for the proper functioning of the methods, in addition to good observation and intuition, the steps are as follows:

### Inductive method:

1. All the facts are observed and subsequently recorded.
2. All recorded events are compared and studied.
3. Generalizations are determined.
4. These generalizations are used to predict.

### Deductive method:

1. The data is collected.
2. All data is observed.
3. I know identify The patterns.
4. The desired conclusion is reached.

## Examples of inductive and deductive methods

There are key examples that will help us understand exactly what the methods are, these examples presented today are very basic. They are as follows:

### Inductive method

Someone wants to dress according to the weather, the inductive method is present when the person has the hypothesis ofIf it is cold he will put on warm clothes, if it is hot he will put on uncovered clothes.

### Deductive method:

• Hypothesis 1: Humans are living beings.
• Hypothesis 2: Kevin is a human.
• Hypothesis 2: Kevin is a living being.

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