Soon after the 2008 financial crisis, Gillian Tett, an anthropologist and the US Managing Editor of the Financial Times, suggested that regulators’ and practitioners’ inability to anticipate and respond to deep problems in the financial industry could be traced back to what she called “silo thinking,” wherein experts in one area know nothing about the methods and research of other areas. As she put it, “the essential challenges for investors today…”—and, we might add, for regulators and academics—is “to understand the (...) micro-details of the silos, and see how all the macro-pieces add up”.In years since, many researchers in many fields have sought to identify causes of the... (shrink)

Behaviourism is the view that preferences, beliefs, and other mental states in social-scientific theories are nothing but constructs re-describing people's behaviour. Mentalism is the view that they capture real phenomena, on a par with the unobservables in science, such as electrons and electromagnetic fields. While behaviourism has gone out of fashion in psychology, it remains influential in economics, especially in ‘revealed preference’ theory. We defend mentalism in economics, construed as a positive science, and show that it fits best scientific practice. (...) We distinguish mentalism from, and reject, the radical neuroeconomic view that behaviour should be explained in terms of brain processes, as distinct from mental states. (shrink)

Decision-making typically requires judgments about causal relations: we need to know the causal effects of our actions and the causal relevance of various environmental factors. We investigate how several individuals' causal judgments can be aggregated into collective causal judgments. First, we consider the aggregation of causal judgments via the aggregation of probabilistic judgments, and identify the limitations of this approach. We then explore the possibility of aggregating causal judgments independently of probabilistic ones. Formally, we introduce the problem of causal-network aggregation. (...) Finally, we revisit the aggregation of probabilistic judgments when this is constrained by prior aggregation of qualitative causal judgments. (shrink)

This is a comprehensive anthology of works concerning the nature of economics as a science, including classic texts and essays exploring specific branches and schools of economics. Apart from the classics, most of the selections in the third edition are new, as are the introduction and bibliography. No other anthology spans the whole field and offers a comprehensive introduction to questions about economic methodology.

In this paper I challenge the pernicious aspects of Milton Friedman's methodological outlook that continues to hold sway over mainstream neoclassical economists. I do this by showing how Friedman's own methodological dicta could have been used against him when he famously advanced the expectations critique of the Phillips curve at his presidential address to the American Economic Association. I use this case study to further suggest that psychological and neurophysiological data should not be deemed irrelevant to economic science.

Recent contributions to the philosophy of the social sciences have motivated ontological commitments using appeals to the social sciences (_naturalized_ social ontologies). These arguments rely on social scientific realism about the social sciences, the view that our social scientific theories are approximately true. I apply a distinction formulated in metaontology between ontologically loaded and unloaded meanings of existential quantification to argue that there is a pragmatic approach to naturalized social ontology that is minimally realist (it treats existence claims as true (...) or false) but that is ontologically austere. I argue that the extant arguments may be construed in terms of this pragmatic approach. The result is an approach to social ontology that is deflationist about naturalized social ontology. (shrink)

Despite the conclusions from the contemporary philosophy of science, many economists cherish the ideal of positive science. Therefore, value-free economics is still the central paradigm in economics. The first aim of the paper is to investigate economics' axiomatic assumptions from an epistemological perspective. The critical analysis of the literature shows that the positive-normative dichotomy is exaggerated. Moreover, value-free economics is based on normative foundations that have a negative impact on individuals and society. The paper's second aim is to show that (...) economics' normativity is not a problem because the discussion concerning values is possible and unavoidable. In this context, Weber and other methodologists are investigated. The conclusion of the paper is that science can thrive without strict methodological rules thanks to institutional mechanisms. Therefore, economists could learn from artists who accept the world without absolute rules. This perspective opens the possibility for methodological pluralism and normative approaches. (shrink)

The books’ goal is to answer the question: Do the weaknesses of value-free economics imply the need for a paradigm shift? The author synthesizes criticisms from different perspectives (descriptive and methodological). Special attention is paid to choices over time, because in this area value-free economics has the most problems. In that context, the enriched concept of multiple self is proposed and investigated. However, it is not enough to present the criticisms towards value-free economics. For scientists, a bad paradigm is better (...) than no paradigm. Therefore, the author considers whether value-based economics with normative approaches such as economics of happiness, capability approach, libertarian paternalism, and the concept of multiple self can be the alternative paradigm for value-free economics. This book is essential reading to everyone interested in the current state of economics as a discipline. (shrink)

This paper is part of the general debate about the need to rethink economics as a human discipline using a heuristic to describe its object, about the need to explicitly reject the positivistic approach in neoclassical economics, and about the urgency to adopt a different methodology, grounded on a realistic set of initial assumptions able to cope with the complexity of the decision making process. The aim of this paper is to show the use of Occam's razor in the economic (...) debate around realism in economic modelling. Occam's razor can be intended as a principle of logic that emphasises simplicity, or as a heuristic tool that emphasises parsimony. Neoclassical economists, such as Samuelson, have explicitly used Occam's razor as a logical principle to highlight the strict logic and simplicity of neoclassical economics; neoclassical models, however, are based on unrealistic assumptions. Some approaches of heterodox economics, au contraire, have used Occam's razor as a powerful heuristic tool to emphasise parsimony, building up models grounded on realistic initial assumptions and capable of embedding complexity into the general explanation of economic behaviour, as in Simon's bounded rationality (1955; 1957) and Hayek's notion of human rationality (1948; 1952; 1974) and cultural and social evolution (1967; 1978). (shrink)

Contemporary developments in economicmethodology have produced a vibrant agenda ofcompeting positions. These include, amongothers, constructivism, critical realism andrhetoric, with each contributing to the Realistvs. Pragmatism debate in the philosophies of thesocial sciences. A major development in theneo-pragmatist contribution to economicmethodology has been Quine's pragmatic assaulton the dogmas of empiricism, which are nowclearly acknowledged within contemporaryeconomic methodology. This assault isencapsulated in the celebrated Duhem-Quinethesis, which according to a number ofcontemporary leading philosophers of economics,poses a particularly serious methodologicalproblem for economics. This problem, (...) asreflected in Hausman's analysis, consists ofthe inability of economics to learn fromexperience, thereby subverting the capacity totest economic theories. In this paper wedispute this position. Our argument is basedon a combination of Quine's holism with VanFraassen's constructive empiricism, especiallythe latter's analysis of empirical adequacy andhis pragmatic approach to explanation. Theresulting reorientation of economic methodologyrestores the capacity of economics to learnfrom experience and reinstates the imperativeof developing alternatives to orthodoxtheorizing in economics. (shrink)

The folk conception of money as an object is not a promising starting point to develop general, explanatory metaphysical accounts of the social world. A theory of institutions as rules in equilibrium is more consistent with scientific theories of money, is able to shed light on the folk view, and side-steps some unnecessary puzzles.

Most philosophical decision theorists and philosophers of the social sciences believe that decision theory is and should be in the business of providing folk psychological explanations of choice behaviour, and that it can only do so if we understand the preferences, utilities and probabilities that feature in decision-theoretic models as ascriptions of mental states not reducible to choice. The behavioural interpretation of preference and related concepts, still common in economics, is consequently cast as misguided. This paper argues that even those (...) who strive to provide folk psychological explanations should side with the economists, and adopt a behavioural interpretation of the preferences featuring in decision-theoretic models. Under a mentalistic interpretation of preference, decision-theoretic models do not straightforwardly provide ordinary folk psychological explanations. Instead, they involve controversial enough commitments about the mental causes of choice to not only fail to adequately capture much unreflective decision-making, but also many intentional, reason-based and instrumentally rational choices. Satisfactory folk psychological explanation in fact only comes indirectly from inferring more fundamental conative attitudes from a pattern of decision-theoretic preferences. And the behavioural interpretation does a better job at facilitating such inferences. My argument extends to the related concepts of utility and probability. (shrink)

This article is a prelude to an experimental study of the preference concept in economics. I argue that a new empirical approach called experimental philosophy of science is a promising approach to advance the philosophy of economics. In particular, I discuss two debates in the field, the neuroeconomics controversy and the commonsensible realism debate, and suggest how experimental and survey techniques can generate data that will inform these debates. Some of the likely objections from philosophers and economists are addressed, and (...) possible ways of operationalizing different preference concepts are illustrated. (shrink)

Choice modellers are frequently criticized for failing to provide accurate representations of the neuro-psychological substrates of decisions. Several authors maintain that recent neuro-psychological findings enable choice modellers to overcome this alleged shortcoming. Some advocate a realistic interpretation of neuro-psychological models of choice, according to which these models posit sub-personal entities with specific neuro-psychological counterparts and characterize those entities accurately. In this article, I articulate and defend three complementary arguments to demonstrate that, contrary to emerging consensus, even the best available neuro-psychological (...) models of choice cannot be justifiably given this realistic interpretation. Moreover, I explicate what challenges will continue to hamper neuro-psychological modellers’ attempts to substantiate a realistic interpretation of their models. In doing so, I draw on the literature on scientific modelling to advance the ongoing philosophical discussion concerning the ontological status of the sub-personal entities posited in distinct decision sciences, the resemblance relations that supposedly connect choice models and the neuro-psychological substrates of decisions, and what conditions these models must satisfy to be regarded as realistic representations of their target systems. (shrink)

In this contribution, I comment on Raffaella Campaner’s defense of explanatory pluralism in psychiatry (in this volume). In her paper, Campaner focuses primarily on explanatory pluralism in contrast to explanatory reductionism. Furthermore, she distinguishes between pluralists who consider pluralism to be a temporary state on the one hand and pluralists who consider it to be a persisting state on the other hand. I suggest that it would be helpful to distinguish more than those two versions of pluralism – different understandings (...) of explanatory pluralism both within philosophy of science and psychiatry – namely moderate/temporary pluralism, anything goes pluralism, isolationist pluralism, integrative pluralism and interactive pluralism. Next, I discuss the pros and cons of these different understandings of explanatory pluralism. Finally, I raise the question of how to implement or operationalize explanatory pluralism in scientific practice; how to structure the “genuine dialogue” or shape “the pluralistic attitude” Campaner is referring to. As tentative answers, I explore a question-based framework for explanatory pluralism as well as social-epistemological procedures for interaction among competing approaches and explanations. (shrink)

This paper aims (a) to provide characterizations of realism and instrumentalism that are philosophically interesting and applicable to economics; and (b) to defend instrumentalism against realism as a methodological stance in economics. Starting point is the observation that ‘all models are false’, which, or so I argue, is difficult to square with the realist's aim of truth, even if the latter is understood as ‘partial’ or ‘approximate’. The three cheers in favour of instrumentalism are: (1) Once we have usefulness, truth (...) is redundant. (2) There is something disturbing about causal structure. (3) It's better to do what one can than to chase rainbows. (shrink)

In those parts of his paper that have the clearest bearing upon mycontributions, Simon Deichsel 1) elaborates various conceptions ofrealism; 2) declares himself an anti-realist of a specific sort; 3) seeks toidentify and criticise pragmatic aspects of my justification for adoptinga realist orientation; and 4) argues that his anti-realist perspective ispreferable to realism.An immediate problem with Deichsel’s project, if intended as acritique of my own realist orientation, is that the sort of realism againstwhich his anti-realism is oppositionally defined is not (...) the versionof realism I maintain. In fact the only one of Deichsel’s formulationsthat I unambiguously accept as a version of realism is ontological realism. Realism as I understand the term is about existence.It is ontological in nature. At its most basic, it posits the existence of an‘external’ reality.1So understood, realism is not a theory of knowledge, or of language,or even of truth. Indeed so formulated it says nothing about knowledgeor truth.2In particular it does not commit anyone to the correspondencetheory of truth, or indeed to any other theory or conception of truth.In fact it is not a semantic theory at all. (shrink)