How do economists generally test their models?

Economists primarily test their models by collecting data, which allows them to evaluate the accuracy and reliability of their theoretical predictions. This process involves empirical observations and statistical techniques to assess the relationship between different economic variables as outlined in their models. By gathering real-world data, economists can compare the outcomes predicted by their models with actual outcomes to identify any discrepancies and refine their theories accordingly.

While simulating scenarios is a valuable tool for exploring potential outcomes under various conditions, it does not provide the direct empirical evidence that data collection does. Gathering public opinions might aid in understanding consumer sentiment, but it does not serve as a rigorous test of economic models. Similarly, using mathematical proofs can help develop and support economic theories, but it does not constitute a method for testing these theories against observed realities. Collecting data remains the cornerstone of empirical analysis in economics, providing the necessary foundation for validating or challenging theoretical models.