Should economic theories be developed as a result of observation or before observation explain?

Economic theories should ideally be developed as a result of observation, as empirical data provides a foundation for understanding real-world phenomena. Observational insights can reveal patterns and behaviors that theoretical models might overlook. However, theoretical frameworks can also guide observations by offering hypotheses to test, creating a dynamic interplay between theory and empirical evidence. Ultimately, a balanced approach that incorporates both observation and theory is essential for robust economic analysis.