Article 3: Data, Theory and Explanation

The economic phenomena consist of observable things. They are usually described by statistics, or more generally by 'data', which may include institutions, rules, and regulations as well as facts and figures. Therefore, economic theory seeks to explain data.

In technical language, what we are doing is the following. Begining with a set of ideas, we construct propositions called "explanations". They have the form: "If A , then B', where "A" consists of ideas, and "B" important aspects of the data. The data are explained in the sense that "B" is deducted from "A", with the latter being the cause and the former the effect.