The Conceptual Framework

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 Organization of this lecture
Conceptual Framework:
• Role of the Conceptual Framework
• Theory: Source of Conceptual Framework
• Hypotheses and Hypothesis Testing
• Operational Suggestions

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“Economics is the science of thinking in
terms of models joined to the art of
choosing models which are relevant to the
contemporary world. Good economists are
scarce, because the gift of using ‘vigilant
observation’ to choose good models …
appears to be a very rare one.”
John Maynard Keynes

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• Although a conceptual framework may not
always be required in a research proposal, no
economic research should start without
developing one.
• There is more misunderstanding and confusion
about the conceptual framework than any
other part of a research proposal (or project).
– What is it?
– What is the purpose?
– How is it approached?
• It is an integral part of understanding and
analyzing the research problem
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• A clear statement of the research problem
often does not occur until the conceptual
framework is developed.
• It should be considered “complementary” to
the problem description, statement of
objectives, and literature review, rather than a
“fourth step”.
• The reasoning in the conceptual framework
runs through the whole proposal.

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• The conceptual framework is often neglected,
or done hastily and inadequately
• Reasons for this might be that it requires
complex reasoning and abilities
– Abstract reasoning
– Recognition and synthesis of central points
– Knowledge of existing relevant theory
– Understanding the details of a problem and the
surrounding issues
• It is hard work and often frustrating

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• Another reason the conceptual framework is
overlooked is that researchers often want to get
on with “real research” instead of “theorizing”
(especially in subject-matter and problem-
solving research)
• However, failure to conceptualize while
planning, may actually slow down the research,
or can lead to fatal errors in design, procedures
or interpretation.

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 Role of the Conceptual Framework
• Concepts are generalizations. In economics, a
concept is “a logical, mental construction of one
or more relationships”.
• Concepts are inherently abstract and are based
on logic and reasoning. In economics, concepts
typically focus on relationships between
variables.
• The primary purpose of the conceptual
framework is to lead to hypotheses that are
subject to testing
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• The conceptual framework may be viewed as
an analysis of the research problem using
theory.
• Economic theory will be used, and possibly
theories from other disciplines as well.
• The theories are identified and then used in a
conceptual analysis of the specific research
problem

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 Source Material for the Conceptual
Framework: Theories
• Which theory is relevant? The relevant theory
will provide insights into one or more of the
following issues:
– Sources of the research problem
– Possible solutions to the problem
– Relevant variables
– Relationships involved in analyzing the problem
– Hypotheses to be tested
(Williams, 1984)

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• For example – if one is interested in the
problem of water use efficiency of the Nile river
in Egypt:
– The general theory of the efficiency in use of a
limited, but replenishable resource would be used
– The theory would be adapted to the particular
natural resource (water) and place (Egypt), in its
various uses (agricultural, domestic, industrial)
• In this example, it is also likely that Egyptian
policy would need to be considered
eg. Egypt has a policy of free water for agriculture,
which affects water use efficiency
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• Sometimes, there is no existing theory
sufficient to analyze the research problem.
• In this case, one can either develop or refine a
theory, or simply identify the gap and present
an incomplete conceptual framework
– This latter option of proceeding without an
adequate theoretical basis, might be defensible in
an MS thesis, but probably not in a PhD dissertation
or in professional research

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Hypotheses and Hypothesis Testing
• A primary function of the conceptual
framework is to lead to hypotheses relevant to
the research problem. Hypotheses result from
the reasoning done in the conceptual
framework.
• Hypotheses need to be testable and refutable.
• Hypotheses are tentative assertions that are
subject to testing.

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• Hypotheses can take the form of a simple
proposition of an expected outcome, or can
assert the existence of a relationship. eg.
– A simple proposition might be that one production
system, based on a particular technology is more
profitable than another production system based
on another technology
– A hypothesis of a relationship could be that in
demand for wine in the US, the per capita
consumption of wine is affected by price of wine,
the price of other beverages, per capita income,
religious affiliation, and ethnic background

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• Quantitative hypotheses are subject to
empirical testing, the most common form being
a statistical test. Four characteristics facilitate
this:
1) They must be stated in specific terms
2) Appropriate data must be available
3) Analytical techniques must be available
4) There must be a conceptual basis (without which
quantification only shows association, not
causation).

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• Qualitative hypotheses can be of three types (as
introduced in Lecture 3)
1. Maintained hypotheses (assumed) often take the
form of assumptions we make on conditions in
which the problem exists. eg. The commodity
production segment in agricultural may be assumed
to be competitive
2. Diagnostic hypotheses deal with the causes of a
problem. eg. A country’s chronic trade deficit may
be hypotheses as due in part to foreign investment
policy and commodity price ceilings.
3. Remedial hypotheses, which deal with solutions to
problems, are optional since they are so closely
related to diagnostic hypotheses
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• Three difficulties people often have in
developing hypotheses are:
1. Absence of a clear theoretical framework or
absence of theory
2. Inability to use the framework logically to see
the hypotheses within
3. Failure to understand research techniques that
allow the hypotheses to be tested

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 Operational Suggestions
• Keep a clear focus on the primary purpose of
the conceptual framework – to analyze the
research problem.
• A good way to start is to use simple conceptual
models, and then build on them to the
complexity and sophistication necessary.
• This can be a useful approach for all kinds of
research, policy analysis, and problem solving.

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The following steps may be useful in developing
the conceptual model:
1) Study the research literature related to your
problem. How have others conceptualized
problems similar to yours? Are their conceptual
analyses adaptable to your framework?
2) Reduce the problem to the simplest set of
conditions. Sometimes you can “assume away”
parts of a complex problem to gain an initial
understanding.
3) Identify applicable economic theory. Consider a
wide range of economic theories in selecting the
most appropriate.
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4) Start with a “base model” analysis. Based on your
literature review and basic assumptions, start with a
simple model (statistical, graphical, mathematical …)
5) Expand the base model to other relevant
dimensions of the problem. Alter and relax
assumptions, then reanalyze the problem. This will
likely make the model more complex, but
remember, the goal is not complexity, but rather,
accurately addressing the problem.
6) Assemble relevant, testable hypotheses from the
conceptual analysis.

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• Conceptual frameworks go by many names;
“model”, “conceptual model”, “conceptual
considerations”, “theoretical considerations”,
etc.
• Sometimes it is simply integrated into the
problem description, but in academic
proposals, conceptual frameworks are usually
presented in a separate section.

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