Consider that you're modeling your farm's production of corn. There are variables that can affect your crops but that your crops cannot affect. External factors like crop-eating pests and the weather would be exogenous variables. This is because these variables can't be affected by other variables in the model. They can cause more or fewer crops to grow, but the crops can't affect them in return.
Your net income would depend on a variety of factors, including tax rate. Because the tax rate can't be affected by other variables in the model, the tax rate is an exogenous variable. Related: Understanding Economics: Definition and Application. An endogenous variable is a variable in an economic model that has a value determined by the model.
The endogenous variable is the dependent variable, meaning its value depends on other variables within the model. Because the endogenous variable exists within the economic model, the model can predict the value of the endogenous variable. An endogenous variable is the opposite of an exogenous variable, as exogenous variables are independent variables that can't be predicted by the economic model.
Here are some examples of real-world situations involving endogenous variables:. Consider that you're modeling how many cookies a bakery produces each day. In this case, the endogenous variable would be how many cookies the bakery sells. The endogenous variable—the number of cookies sold—depends on other variables in the model, including the number of employees working and the price of cookie ingredients. Imagine that a lighting manufacturer is modeling how many lamps it produces.
The number of lamps produced depends on other variables in the model, including the price of lamp parts. Therefore, the endogenous variable, in this case, is the number of lamps produced. Related: 10 Types of Variables in Research and Statistics.
This semisolid magma continues to move upwards through the crust, experiences less pressure and so becomes more fluid. As the liquid rock solidifies, it loses its heat to the surrounding crust. The study of endogenic processes and their resulting landforms and landscapes puts important constraints on the internal evolution and the surface history of a geologic body.
The transition zone between these two types of crust is sometimes called the Conrad discontinuity. Silicates mostly compounds made of silicon and oxygen are the most abundant rocks and minerals in both oceanic and continental crust. Geologists study rocks because they contain clues about what the Earth was like in the past. Different rocks form under only certain conditions and even the dullest gray lump of a rock can tell us something important about the past.
Begin typing your search term above and press enter to search. Press ESC to cancel. Skip to content Home Philosophy What is the difference between endogenous and exogenous? Ben Davis February 1, What is the difference between endogenous and exogenous? Is government spending endogenous or exogenous? What does endogenous mean in psychology? What are the 4 types of biological rhythms?
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What Is an Endogenous Variable? Key Takeaways Endogenous variables are variables in a statistical model that are changed or determined by their relationship with other variables. Endogenous variables are dependent variables, meaning they correlate with other factors—although it can be a positive or negative correlation.
Endogenous variables are important in economic modeling because they show whether a variable causes a particular effect. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.
This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Terms Sensitivity Analysis Sensitivity analysis determines how different values of an independent variable affect a particular dependent variable under a given set of assumptions. Spurious Correlation Definition In statistics, a spurious correlation, or spuriousness, refers to a connection between two variables that appears causal but is not.
How the Coefficient of Determination Works The coefficient of determination is a measure used in statistical analysis to assess how well a model explains and predicts future outcomes. Error Term An error term is a variable in a statistical model when the model doesn't represent the actual relationship between the independent and dependent variables. This is the "output" of our economic model of Farmer Jones's production decision.
The "inputs" would be the explanatory variables that influence the amount he sells, which might include the market price and the amount of rain that falls during the summer.
Can these inputs to the model be safely treated as exogenous variables? In this case, the answer is probably yes. Suppose that something other than price or rainfall were to cause Farmer Jones's production to be higher than normal perhaps an unexpectedly good application of fertilizer.
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