The Behavioral Economics in Marketing’s Podcast Ceteris Paribus | Definition Minute | Behavioral Economics in Marketing Podcast
Jan 5, 2023
A quick definition of the Latin phrase ceteris paribus and how it is used to isolate cause and effect. Simple everyday examples show when the assumption holds and when outside factors break it. A concise look at why economists rely on holding variables constant for analysis.
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Holding Variables Constant
- Ceteris paribus means holding all other things constant so you can isolate the relationship between two variables.
- This lets economists state causal or logical connections without accounting for every possible influence.
Paper Toss Example
- Sandra uses a crumpled paper thrown from a window to show gravity working ceteris paribus.
- She then contrasts that with a gust of wind that prevents the paper from falling directly to the ground.
Why Economists Use It
- Economists use ceteris paribus because they cannot control for limitless possible variables in real settings.
- Attempting to account for every contingency would be impractical and could consume a researcher's lifetime.