Stylized fact

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In social sciences, especially economics, a stylized fact is a simplified presentation of an empirical finding. While results in statistics can only be shown to be highly probable, in a stylized fact, they are presented as true. They are a means to represent complicated statistical findings in an easy way. A stylized fact is often a broad generalization, which although essentially true may have inaccuracies in the detail.

A prominent example of a stylized fact: "Every level of higher education--high school, College degree, Diploma/Masters and Advanced/Professional degree significantly raises (lifetime) income." Another prominent example of a stylized fact in economics: "In advanced economies, real GDP growth fluctuates in a recurrent but irregular fashion, with an average cycle length of five to eight years"

As noted above, scrutiny to detail will often produce counterexamples. In the case given above, it is known that a PhD actually lowers lifetime income^{[citation needed]} but, as a stylized fact, the above example 'holds', nonetheless. Of course this depends heavily on interest rates and inflation at the time. Furthermore PhDs vary among fields for income levels and cannot be generalized.

[edit] References

^[1] Burda, Wyplosz (2005): Macroeconomics: A European Text, Fourth Edition, Oxford University Press