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Ceteris Paribus Examples

Ceteris paribus is a Latin phrase that means “other things being equal.” The term is most commonly used in economics, though it can be used in other fields, including physics and psychology. It is used when people want to explain a situation of cause and effect, but do not want to examine all of the factors in a situation at once; rather, they want to zero in on how the change in just one independent variable will affect another dependent variable when all the other factors in the situation stay the same.

Ceteris Paribus in Economics

  • If the price of beef increases, ceteris paribus, people will purchase less beef. In this situation, ceteris paribus means that the possibility of other changes affecting the sales of beef will not be considered. Other things could happen that would keep the sales of beef the same or even increase the sales of beef – for example, the price of other meats could increase even more than the price of beef increased, leaving beef as the cheapest meat available, or the Centers for Disease Control could announce that eating beef prevents cancer, which would most likely increase the sales of beef – but in this situation, we only want to consider what happens if the price of beef rises while keeping all other factors the same.
  • If the United States drilled for oil off of its own shores, ceteris paribus, the price of gasoline in the United States would drop significantly. This does not factor in any other variables that could affect the price of gasoline in the United States – factors that could, perhaps, keep the price of gasoline high even if the United States did drill close to home. For example, the United States government could add so many taxes onto the price of gas at the pump that the price consumers would pay for domestic gasoline could be equal to or higher than gas obtained from oil from other countries. Environmental laws could be enacted that would require companies drilling for domestic oil to pay exorbitant amounts of money for insurance policies, and this price could be passed along to the consumer, therefore keeping the price of gas high.

Ceteris Paribus in Psychology

  • Ceteris paribus, people make decisions about what actions they will take or behaviors they will exhibit based on the goals that they have set for themselves or the results that they want to achieve. For example, if a person wants a certain thing “X” to happen and believes that exhibiting a specific behavior “Y” will cause “X” to occur, she or he will make an attempt to exhibit behavior “Y.” This does not take into account all the other factors that could prohibit the person from exhibiting behavior “Y” even though it seems as if he would want to exhibit behavior “Y.”

Ceteris Paribus in Physics

  • Ceteris paribus, planets orbit in an elliptical pattern. This does not take into account other factors that could cause a planet to orbit in a non-elliptical pattern.

With these examples you can see how the concept of ceteris paribus, other things being equal, can be used in different fields and different situations.

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