Define: Ceteris Paribus

Ceteris paribus is a Latin phrase that translates to “all other things being equal” or “holding other things constant.” In economics and other social sciences, ceteris paribus is used as a theoretical assumption or simplifying device to isolate the effect of a specific variable or factor on a particular outcome or relationship. By assuming that all other relevant factors remain unchanged, ceteris paribus allows economists to analyse the impact of individual variables in controlled settings and make predictions or generalizations about how changes in those variables might affect outcomes. While ceteris paribus assumptions are useful for theoretical analysis and modelling, they may not always hold true in real-world situations, where multiple factors interact and influence outcomes simultaneously. Therefore, ceteris paribus analyses are often accompanied by caveats and limitations, and economists must carefully consider the applicability of their findings to real-world contexts.

Ceteris paribus is a Latin expression which loosely means “holding other things constant”. Mostly used in economics, this phrase is used by economic analysts to denote the effect of one economic change on another when all other variables, which may affect the latter, remain constant. The use of this phrase in economics is done for simplification of the formulation and description of economic changes and results.

For example, if the price of beef rises, ceteris paribus, sales of beef will fall. The second variable can be affected by various other factors. However, the use of the phrase ceteris paribus takes these factors as constant.

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This glossary post was last updated: 29th March, 2024.