Download Ceteris Paribus

Ceteris Paribus
Excerpted from
http://en.wikipedia.org/wiki/Ceteris_paribus
Ceteris paribus or caeteris paribus is a Latin phrase, literally translated as “with other things the
same,” or “all other things being equal or held constant.” It is commonly rendered in English as “all
other things being equal.” A prediction, or a statement about causal or logical connections between two
states of affairs, is qualified by ceteris paribus in order to acknowledge, and to rule out, the possibility
of other factors that could override the relationship between the antecedent and the consequent.
A ceteris paribus assumption is often fundamental to the predictive purpose of scientific inquiry. In
order to formulate scientific laws, it is usually necessary to rule out factors which interfere with examining a specific causal relationship. Under scientific experiments, the ceteris paribus assumption is
realized when a scientist controls for all of the independent variables other than the one under study, so
that the effect of a single independent variable on the dependent variable can be isolated. By holding
all the other relevant factors constant, a scientist is able to focus on the unique effects of a given factor
in a complex causal situation.
Such assumptions are also relevant to the descriptive purpose of modeling a theory. In such circumstances, analysts such as physicists, economists, and behavioral psychologists apply simplifying
assumptions in order to devise or explain an analytical framework that does not necessarily prove
cause and effect but is still useful for describing fundamental concepts within a realm of inquiry.
One of the disciplines in which ceteris paribus clauses are most widely used is economics, in which they
are employed to simplify the formulation and description of economic outcomes. When using ceteris
paribus in economics, assume all other variables except those under immediate consideration are held
constant. For example, it can be predicted that if the price of beef increases – ceteris paribus – the
quantity of beef demanded by buyers will decrease. In this example, the clause is used to operationally
describe everything surrounding the relationship between both the price and the quantity demanded
of an ordinary good.
This operational description intentionally ignores both known and unknown factors that may also
influence the relationship between price and quantity demanded, and thus to assume ceteris paribus
is to assume away any interference with the given example. Such factors that would be intentionally
ignored include: the relative change in price of substitute goods, (e.g., the price of beef vs pork or
lamb); the level of risk aversion among buyers (e.g., fear of mad cow disease); and the level of overall
demand for a good regardless of its current price level (e.g., a societal shift toward vegetarianism). The
clause is often loosely translated as “holding all else constant.”