Internal and External Validity in Research

 

 

In research, validity refers to how well a study measures what it is intended to measure. Internal and external validity are two critical types that assess the trustworthiness and generalizability of the study’s results.

 1. Internal Validity

 Definition:

Internal validity refers to the degree to which the results of a study are attributable to the independent variable and not to other confounding factors. In other words, did the treatment/intervention actually cause the outcome?

 Factors Affecting Internal Validity:

Threat

Description

Example (Finance Context)

History

Events occurring during the study that affect results.

A major market crash during an investment experiment.

Maturation

Changes in participants over time.

Participants gain financial knowledge over time regardless of the study.

Testing Effect

Repeated testing improves performance.

Investors perform better in later tests due to familiarity, not intervention.

Instrumentation

Changes in measurement tools or procedures.

Using a different version of a financial literacy test halfway through.

Selection Bias

Groups differ at the outset.

One investment group is younger or more educated than the other.

Attrition

Participants drop out unevenly across groups.

More participants from the control group quit the study.

 How to Improve Internal Validity:

·         Random assignment

·         Control groups

·         Pre-test and post-test design

·         Keeping study conditions constant

 2. External Validity

 Definition:

External validity refers to the extent to which the results of a study can be generalized to other settings, populations, or times.

 Factors Affecting External Validity:

Threat

Description

Example (Finance Context)

Population Validity

Can the results apply to other people/groups?

Can a study on college students' investment behavior apply to working professionals?

Ecological Validity

Can the results apply to other environments?

Will findings in a lab-based trading simulation apply to real stock markets?

Temporal Validity

Can results apply at other times?

Does a study on investment trends during COVID-19 apply post-pandemic?

Interaction Effects

Treatment interacts with sample or setting.

A financial app works well only for tech-savvy users in urban areas.

 How to Improve External Validity:

·         Use representative samples

·         Conduct field experiments

·         Replicate the study across different contexts and populations

 Comparison Table

Aspect

Internal Validity

External Validity

Focus

Accuracy of causal relationships

Generalizability of findings

Concerned with

Control of confounding variables

Real-world application

Improved by

Randomization, controls, consistent procedures

Replication, representative samples

Threatened by

Bias, history, maturation, attrition

Sampling bias, artificial settings, time factors

Example

Did financial education cause higher savings?

Will it work in a different country or age group?

 Summary

Type

Validates...

Key Question

Internal Validity

Accuracy of the study’s outcome

"Is the effect really due to the treatment?"

External Validity

Generalizability to other settings

"Can these results be applied to other people or situations?"

 

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