Empirical Evidence

Empirical evidence refers to factual data that is collected by conducting observations and experiments. It is a systematic process; every step is documented. Further, raw data is used to derive meaningful conclusions and findings.

An Investigator first states a hypothesis and then accepts or rejects the theory based on analysis and tests. The analysis relies on facts and figures. Empirical evidence is an indispensable component of marketing, finance, research & development, psychology, engineering, medicine, and sociology.

• Empirical evidence can be verified and validated. An investigator collects facts and figures to conduct scientific research in various disciplines.
• Empirical data can be collected through primary sources—surveys, observation, documentation, and experimentation. Secondary sources refer to published reports, articles, and newspapers. 
• Empirical data is classified into quantitative, qualitative, or a combination of both.
• Empirical data are considered reliable. But, at the same time, this reliability is tarnished by errors. To track errors, researchers document every step of data collection.

Empirical evidence refers to factual data. Most factual data are represented in terms of numerical figures that can be verified and validated. Raw data is collected by conducting experiments and observations—performed in a controlled environment.

Empirical evidence is scientific and standardized—even after repetitive experiments, it remains intact. Based on empirical data, researchers try to prove a hypothesis. They conduct various statistical tests to accept or reject a hypothesis—hypothesis testing.

Along with finance and accounting, empirical data is indispensable in psychology, medicine, sociology, engineering, and marketing. Data collection sometimes requires using human senses like sight, touch, hearing, taste, or smell; contemporarily, though, machine sensors and laboratory testing are more common. Newspapers, journals, published reports, and articles, serve as secondary sources of empirical data.

On the one hand, fact-based data are considered credible; at the same time, errors can easily tarnish the reliability of a data set. Investigators must ensure an error-free collection of data. A small mistake can undo the entire data set, which was collected in a painstaking process. Incorrect information results in irrelevant results.

In order to rectify mistakes, researchers should be able to track the process. Therefore, researchers document data sources, categorized groups, processes, techniques, methods, and controlled variables. To resolve errors and issues, they retest a particular group of data. 

Empirical evidence can be classified into the following three types:

1. Quantitative: Such information is quantifiable, i.e., it can be measured in units. It can be counted or represented in numbers or figures. Moreover, it is drawn from the implementation of mathematical and statistical methods. For clarity, quantitative data is often represented graphically—charts and diagrams. Quantitative data is considered very reliable—it is collected by conducting surveys and experiments.
2. Qualitative: It is available in a non-numerical format. Qualitative data is collected by conducting observations, interviews, case studies, text analysis, etc. Also, it cannot be expressed in figures or numbers. It is more common in fields where human behavior comes into play—psychology, social science, and marketing. Qualitative information is not considered all that reliable—it is prone to personal bias.
3. Mixed: Sometimes, data is collected both in terms of numbers and experience. In marketing, for example, along with product sales volume, customer satisfaction also plays a vital role in the product’s success.

Let us see some examples to understand the application of empirical evidence in finance and marketing: 

Example #1

The finance manager of ABC Ltd. compares the company’s book profit with that of its competitors; LMN Enterprises, PQR Ltd., ST Corp., and XYZ Ltd. The purpose of the analysis is to determine the company’s position in terms of its profitability in the market.

In this example, empirical evidence refers to secondary information gathered from the published financial reports of competitor firms.

Example #2

DLC farms supply fresh fruits and vegetables to some famous restaurants in the US. Now, the company’s marketing manager wants to determine customer satisfaction.

The manager prepares a list of clients and selects the top 50 clients who provide more than 60% of the business—out of 200 clients. For the chosen 50 clients, he collects data on customer experience, expectations, and feedback.

In this example, primary information is the empirical evidence. Based on raw data, the manager makes further conclusions.

This has been a guide to what is Empirical Evidence and its Meaning. We explain empirical evidence in research, psychology, its definition & examples. You can learn more about it from the following articles – 

• Empirical Rule
• Normal Distribution
• Hot Hand