The usefulness of observation and measurement in testing economic theories arises because the theorems of economics are supposed to relate to the act… - Richard Stone

The object of this paper is fivefold. The first objective is to derive a practical system of demand equations which possess properties usually considered desirable from the standpoint of elementary economic theory. The second is to consider the statistical problems involved in applying the system of equations. The third is to analyse the pattern of demand for consumers' goods in terms of this system on the basis of annual data relating to the United Kingdom over the years 1920-38. The fourth is to compare the results of this system, and systems like it, with the actual state of demand in 1900. Finally, the fifth is to compare the post-war structure of demand with what might be expected from the inter-war relationshipp under free-market condition.

There is no hope, as far as I can see, of pushing the postulates of economic theory back to a set of irreducible axioms.

Econometrics may be defined as the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference.