Deductive method is also known as the abstract, analytical, hypothetical or a priori method. This method accepts certain universal truths or axioms and tries to deduce inferences about the particular event through a process of logical reasoning. In other words, deductive method goes from general to particular.
For example, it is a universal truth that ‘man is mortal’. Since James is a man he is also mortal.
Inductive method is also known as Historical method, Concrete method, Analytical method and Realistic method. This method starts investigation on the basis of particular facts, historical events and tries to generalize them with reference to the whole economy. Induction is the process of reasoning by which we try to establish a causal relationship between two phenomena through an examination of a number of individual cases in order to get truth or generalize a phenomenon. Inductive method thus moves from particular to general. On the basis of real facts and particular events attempt is made to formulate general laws.
For example, we observe that Jack buys more rice when the price of rice falls. We further observe that James also purchases more rice at a lower price. Likewise, we observe the behaviour of many buyers of rice in the market. We find similarity in their behaviour and formulate a general law that “people purchase more rice at low prices.”
