An alternative explanation is a second cause that could produce the same pattern in the data. Stating one shows that you understand the limit of what the figures prove. The skill appears in “evaluate” and “discuss” questions, and it follows on from building a chain from evidence to a model within economics data responses.
Why can data fit more than one story?
Data records outcomes, not reasons. If two things happened close together, the table does not tell you which, if either, caused the other. A third factor may have changed at the same time.
Three common sources of alternative explanations are a change that happened at the same time, the reverse direction of cause, and a feature of how the figures were collected.
How do you write one, step by step?
- State your main explanation and the evidence that supports it.
- Look for another change in the context: time of year, costs, income, competitors, population.
- Check whether it would produce the same pattern. If it would, it is a real alternative.
- Write it fairly with “alternatively” or “it is also possible that”.
- Say what would help decide: the extra data you would want.
Worked example
Port Lumen is a fictional town. The bus company cut its fare from RM2.00 to RM1.50, and daily passengers rose from 6,000 to 7,800.
Main explanation. Lower fares make the bus cheaper than other ways to travel, so more people choose it. This is a movement along the demand curve.
Calculation. Fare change = −0.50 ÷ 2.00 = −25%. Passenger change = 1,800 ÷ 6,000 = 30%. The ratio of the percentage changes is 30 ÷ 25 = 1.2.
Alternative explanation. In the same month a large factory opened near the route, and 1,500 of its workers began commuting by bus. That would raise demand at every fare, shifting the demand curve right, whatever the fare did.
What would decide it. Passenger numbers on routes that did not change fare, and the share of new passengers who work at the factory.
Written answer. “The rise in passengers may be due to the fare cut, which lowers cost relative to alternatives. Alternatively, the new factory may have increased demand at every fare. More data on passenger types would show which explanation is stronger.”
The mistake to watch for
Mistaken answer: “The fare fell by 25% and passengers rose by 30%, so the fall in fare caused the rise.”
The student treated two figures that moved together as proof of cause, and used the ratio as if the fare were the only change.
The correction is to say “may have caused” or “is consistent with”, then name the other change. The ratio 1.2 is a valid calculation only if the passenger rise comes from the fare cut, so you should note that assumption.
Check yourself
1. A fictional firm cut its price and sales rose. Give one alternative explanation that does not involve the price cut.
Show answer
Any change that raises demand would do, for example a rise in consumers’ incomes, a successful advertising campaign, or a rival firm running out of stock. The price cut may not be the cause.
2. In a fictional country, towns with more libraries have higher average exam scores. A student says libraries cause higher scores. State an alternative explanation.
Show answer
Richer towns may be able to afford both more libraries and more of other things that help exam results, such as books at home or tuition. Income may be a third factor driving both.
3. What extra evidence would help decide between the bus-fare explanation and the factory explanation above?
Show answer
Passenger numbers on a similar route where the fare did not change would show whether demand rose generally. Survey data on new passengers’ workplaces would show how many were factory workers.
Where this leads next
After this, write a balanced economic analysis without unsupported political verdicts to combine your chain, your alternative and a judgement. Test the set with the mixed practice. The ratios tool with interpretation limits reminds you when a ratio carries an assumption.
Weighing causes is hard to learn from a model answer alone. A teacher can work with you on your own explanations in online one-to-one Economics tuition.