Deductive approach Definition The process of moving from a general theory to specific hypotheses and observations of empirical phenomena

Inductive approach Definition The process of moving from specific observations to more general claims Start with specific case to generate hypothesis Example Explain economic development in one village in Shaanxi Province, China, in 2011

Hypothesis Definition Specific statement that can tested against (additional) evidence. The statement tells a story about the relationship between variables Example: Roads and household rights to land  “causes” more income for households Road + land = higher income

Variable Definition Variable— something that can hold different “scores”; it can vary Example: economic development Different scores Higher (GDP per capita of US$ 5,000) Lower (GDP per capital of US $1,000)

Theory Definition A theory is a general explanation covering a full set of empirical phenomena. It is supported by extensive evidence (not just one example) It is typically based on variables that represent more abstract, general concepts Example: The greater the state investment in infrastructure and the more widespread private property rights, the greater the economic development.

Positive v. normative theory Definition Positive: based on the empirical evidence Normative: based on what is socially desirable