Macroeconomists overwhelmingly believe that macroeconomics requires microfoundations, typically understood as a strong eliminativist reductionism. Microfoundations aims to recover intentionality. In the face of technical and data constraints macroeconomists typically employ a representative-agent model, in which a single agent solves the microeconomic optimization problem for the whole economy, and take it to be microfoundationally adequate. The characteristic argument for the representative-agent model holds that the possibility of the sequential elaboration of the model to cover any number of individual agents justifies treating (...) the policy conclusions of the single-agent model as practically relevant. This eschatological justification is examined and rejected. (shrink)

In recent years, the project of providing microeconomic foundations for macroeconomics has taken on new urgency. Some philosophers and economists have challenged the project, both for the way economists actually approach microfoundations and for more general anti-reductionist reasons. Reductionists and anti-reductionists alike, however, have taken it to be trivial that the macroeconomic facts are exhaustively determined by microeconomic ones. In this paper, I challenge this supposed triviality. I argue that macroeconomic properties do not even globally supervene on microeconomic ones. This (...) is simply a consequence of the difference in the explanatory goals of the respective fields, which implicitly carve out the microeconomic property set in such a way that it underdetermines macroeconomic properties. It means, however, that microeconomics-based foundations for macroeconomics are inadequate in principle. (shrink)

The dominant view among macroeconomists is that macroeconomics reduces to microeconomics, both in the sense that all macroeconomic phenomena arise out of microeconomic phenomena and in the sense that macroeconomic theory—to the extent that it is correct—can be derived from microeconomic theory. More than that, the dominant view believes that macroeconomics should in practice use the reduced microeconomic theory: this is the program of microfoundations for macroeconomics to which the vast majority of macroeconomists adhere. The "microfoundational" models that they actually (...) employ are, however, characterized by another feature: they are highly idealized, even when they are applied as direct characterizations of actual data, which itself consists of macroeconomic aggregates. This paper explores the interrelationship between reductionism and idealization in the microfoundational program and the role of idealization in empirical modeling. (shrink)

In this paper I will discuss the problem of evaluating dynamic properties of the procedural rules that govern science. I will propose a novel framework for evaluating dynamic properties of such rules. This framework is based upon an analogy from New Institutional Economics. I will argue that the concept of ‘adaptive efficiency’, as it has been developed by Douglass North, solves a problem in economics that is analogous to the problem of evaluating dynamic properties of the procedural rules that govern (...) science. I will propose to apply the main ideas underlying this concept to Chrysostomos Mantzavinos’s theory of Explanatory Games. Based on these ideas, I will develop the concept of ‘explanatory efficiency’. This concept is meant to provide the means to evaluate the dynamic properties of Explanatory Games. I will argue that the proposed analogy also motivates more general applications of New Institutional Economics to traditional problems of philosophy of science. (shrink)

This paper explores the individualism-holism debate in social ontology and proposes a novel approach to the formalization of our intuitions and claims about social entities. Responding to recent calls for gradualist approaches in lieu of traditional sum-zero scenarios, it is argued that formal tools can be extracted from Integrated Information Theory (IIT) that provide a suitable logical language for gradualist descriptions and analyses of social entities.

In the eyes of its practitioners, economics is both a deductive science and an empirical science. The starting point of its deductions might be thought of as first principles. But what is the status of such principles? The tension between foundationalism, the idea that there are necessary and secure first principles for economic inquiry, and fallibilism, the idea that no belief can be certified as true beyond the possibility of doubt, is explored. Empirical disciplines require some sort of falsifiability. Yet, (...) empirical inquiries also require a starting place—if not a necessarily true one, at least an indubitable one, that is, one that is not actually doubted. Indubitability appears to have necessary consequences, undercutting fallibilism, while fallibilism threatens confidence in the de facto first principles that begin inquiry. This tension is examined in three well-known attempts to define economics and its method: John Stuart Mill’s economics as the science of wealth, Lionel Robbins’s economics as constrained optimization; and George Stigler and Becker’s attempt to reformulate neoclassical economics to square empiricism with Robbins’ deductivism. (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)

Economics prefers complete explanations: general over partial equilibrium, microfoundational over aggregate. Similarly, probabilistic accounts of causation frequently prefer greater detail to less as in typical resolutions of Simpson’s paradox. Strategies of causal refinement equally aim to distinguish direct from indirect causes. Yet, there are countervailing practices in economics. Representative-agent models aim to capture economic motivation but not to reduce the level of aggregation. Small structural vector-autoregression and dynamic stochastic general-equilibrium models are practically preferred to larger ones. The distinction between exogenous (...) and endogenous variables suggests partitioning the world into distinct subsystems. The tension in these practices is addressed within a structural account of causation inspired by the work of Herbert Simon’s, which defines cause with reference to complete systems adapted to deal with incomplete systems and piecemeal evidence. The focus is on understanding the constraints that a structural account of causation places on the freedom to model complex or lower-order systems as simpler or higher-order systems and on to what degree piecemeal evidence can be incorporated into a structural account. (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)