Falsificationism about Economics

Abstract: This paper examines Mark Blaug's position on the normative character of Paretian welfare economics: in general, and specifically with respect to his debate with Pieter Hennipman over this question during the 1990s. The paper also clarifies some of the confusions that emerged within the context of this debate, and closes by providing some additional arguments supporting Blaug's position that he himself did not provide.

A rejoinder to commentators of the paper by P. Mongin, "Le réalisme des hypothèses et la "Partial Interpretation View"", Philosophy of the Social Sciences, 18, 1988, p. 281-325. (This paper is listed and made available by Philpapers.).

The article discusses Friedman's classic claim that economics can be based on irrealistic assumptions. It exploits Samuelson's distinction between two "F-twists" (that is, "it is an advantage for an economic theory to use irrealistic assumptions" vs "the more irrealistic the assumptions, the better the economic theory"), as well as Nagel's distinction between three philosophy-of-science construals of the basic claim. On examination, only one of Nagel's construals seems promising enough. It involves the neo-positivistic distinction between theoretical and non-theoretical ("observable") terms; so (...) Friedman would in some sense argue for the major role of theoretical terms in economics. The paper uses a model-theoretic apparatus to refine the selected construal and check whether it can be made to support the claim. This inquiry leads to essentially negative results for both F-twists, and the final conclusion is that they are left unsupported. (shrink)

Popper's well-known demarcation criterion has often been understood to distinguish statements of empirical science according to their logical form. Implicit in this interpretation of Popper's philosophy is the belief that when the universe of discourse of the empirical scientist is infinite, empirical universal sentences are falsifiable but not verifiable, whereas the converse holds for existential sentences. A remarkable elaboration of this belief is to be found in Watkins's early work on the statements he calls “all-and-some,” such as: “For every metal (...) there is a melting point.” All-and-some statements are both universally and existentially quantified in that order. Watkins argued that AS should be regarded as both nonfalsifiable and nonverifiable, for they partake in the logical fate of both universal and existential statements. This claim is subject to the proviso that the bound variables are “uncircumscribed” ; i.e., that the universe of discourse is infinite. (shrink)

The paper applies confirmation theory to a famous statement of economics, the law of demand, which says that ceteris paribus, prices and quantities demanded change in opposite directions. Today's economists do not accept the law unless definite restrictions hold, and have shown little interest in deciding whether or not these restrictions were satisfied empirically. However, Hildenbrand (1994) has provided a new derivation of the law of aggregate demand and used this theoretical advance to devise a test that may be the (...) first rigorous one ever performed on the law. The paper accounts for Hildenbrand's and, in less detail, his predecessors' contributions within the philosophical framework of Hempel (1965) and Glymour (1980). Its salient result is that economists have accepted the "consequence condition", and rejected the "converse consequence condition", and thus implicitly adhered to a Hempelian- Glymourian view of confirmation and testability. (shrink)