Should economics study the psychological basis of agents' choice behaviour? I show how this question is multifaceted and profoundly ambiguous. There is no sharp distinction between "mentalist'' answers to this question and rival "behavioural'' answers. What's more, clarifying this point raises problems for mentalists of the "functionalist'' variety (Dietrich and List, 2016). Firstly, functionalist hypotheses collapse into hypotheses about input--output dispositions, I show, unless one places some unwelcome restrictions on what counts as a cognitive variable. Secondly, functionalist hypotheses make some (...) risky commitments about the plasticity of agents' choice dispositions. (shrink)

Many economic measures are structured to reflect ethical values. I describe three attitudes towards this: maximalism, according to which we should aim to build all relevant values into measures; minimalism, according to which we should aim to keep values out of measures; and an intermediate view. I argue the intermediate view is likely correct, but existing versions are inadequate. In particular, economists have strong reason to structure measures to reflect fixed, as opposed to user-assessable, values. This implies that, despite disagreement (...) about precisely how to do so, economists should standardly adjust QALYs and DALYs to reflect egalitarian values. (shrink)

Many philosophers of science have argued that social and ethical values have a significant role to play in core parts of the scientific process. This naturally suggests the following question: when such value choices need to be made, which or whose values should be used? A common answer to this question turns to democratic values—the values of the public or its representatives. I argue that this imposes a morally significant burden on certain scientists, effectively requiring them to advocate for policy (...) positions they strongly disagree with. I conclude by discussing under what conditions this burden might be justified. (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 article, I will discuss two prominent views on the relevance and irrelevance of ontological investigations for the social sciences, namely, ontological foundationalism and anti-ontological pragmatism. I will argue that both views are unsatisfactory. The subsequent part of the article will introduce an alternative role for ontological projects in the philosophy of the social sciences that fares better in this respect by paying attention to the ontological assumptions of actual social scientific theories, models, and related explanatory practices. I will (...) illustrate and support this alternative through discussion of three concrete cases. (shrink)

This paper provides a methodological analysis of Libertarian Paternalism, as put forward in the book Nudge by Richard Thaler and Cass Sunstein (Yale University Press, 2008). Libertarian Paternalism aims to use the accumulated findings of behavioural economics in order to assist decision-makers to make better choices. The philosophical debate about this proposal has focused on normative issues with regards to this proposal. This paper analyses Libertarian Paternalism descriptively and points out four methodological conditions for successful Nudges. On that basis, a (...) methodological critique of Libertarian Paternalism is mounted: the success conditions suggest that Nudges might be even harder to implement and to justify than commonly assumed in the philosophical debate. (shrink)

Fundamental questions in value sensitive design include whether and how high-tech products/artefacts could embody values and ethical ideals, and how plural and incommensurable values of ethical and social importance could be chosen rationally and objectively at a collective level. By using a humanitarian cargo drone study as a starting point, this paper tackles the challenges that VSD’s lack of commitment to a specific ethical theory generates in practical applications. Besides, it highlights how mainstream ethical approaches usually related to VSD are (...) incapable of solving main ethical dilemmas raised by technological design for well-being in democratic settings. Accordingly, it is argued that VSD’s ethical-democratic import would substantially be enhanced by the espousal of a procedural ethics stance and the deliberative approach to value and welfare entailed by Amartya Sen’s capability approach. Differently from rival ethical–political theories, its normative and meta-ethical foundations better handle human diversity, value-goal pluralism, conflicting vested interests as well as the epistemic-moral disagreements typical of contemporary complex democracies. Particularly, Sen’s capability approach procedural-deliberative tenets result in an “objective-impartial” choice procedure selecting a “hierarchy” of plural incommensurable values and rational goals thus, suitable to validate an applied science such as welfare-oriented technological design in concrete social environments. Conclusions suggest that refining VSD with a capability-based procedural approach to ethics fosters the concern for democracy and social justice while preserving vital scientific-technical standards. Major advantages are at an applied level to delivering ethically and socially justified, but yet highly functional technologies and high-tech products/artefacts. (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)

As behavioural economics reveals, human decision-making deviates from neoclassical assumptions about human behaviour and people (often) fail to make the ‘right’ welfare-enhancing choice. The purpose of Sunstein and Thaler’s concept of ‘nudge’ is to improve individual welfare. To provide normative justification, they argue that the only relevant normative criterion is whether the individual is ‘better off as judged by themselves’, so that the direction in which people are to be nudged is defined by their own preferences. In light of behavioural (...) findings, however, people’s choices do not provide a sound basis for eliciting preferences and thus for assessing welfare. In this paper, I aim to challenge Sunstein and Thaler’s normative view, arguing that it is unreasonable to rely on conventional welfare economics, particularly considering the given context. Sunstein and Thaler depend on an approach of ‘preference purification’ which assumes informed, latent, and true preferences: As a result they face crucial methodological, epistemological, and practical objections, and cannot show how their approach enhances individual welfare. By building on the concepts of R. Sugden and C. Schubert, I develop an alternative normative framework for behavioural public policy, based on a contractualist perspective in which people may consent to collective choice rules in order to align future behaviour with values, to achieve particular goals or to preserve personal integrity. Individual consent and citizens’ participation and deliberation are crucial to this approach. This contractualist approach may provide a normative justification for behavioural public policy, and help to reconcile behavioural and normative economics. (shrink)

I respond to some challenges raised by my critics. In particular, I argue in favour of six claims. First, against Alexandrova and Northcott, I point out that to deny the explanatoriness of economic models by assuming an ontic (specifically, causal) conception of explanation is to beg the question. Second, against defences of causal realism (by Hausman, Mäki, Rol and Grüne-Yanoff) I point out that they have provided no criterion to distinguish those claims a model makes that can be interpreted realistically (...) (the model's ?causal content? or claims it makes about causal powers or mechanisms) and those the realist can safely ignore. Third, I point out that Hausman's and Rol's claims about robustness plus the empirical observation that economic models are hardly ever robust to the right kinds of specification changes imply that these models do not explain (which is problematic as my original article argued). Fourth, I point out that Sugden's response still leaves an important question unanswered, viz. what makes economic models explanatory. Fifth, I sketch an alternative, instrumentalist account of explanation and argue that it would fit Sugden's bill. Sixth, I point out that under this account of explanation, economic models would come out as non-explanatory, which brings us back to Alexandrova and Northcott's account and its associated difficulties. The ?explanation paradox?, therefore, remains unscathed. (shrink)

The phenomenon of weakness of will – not doing what we perceive as the best action – is not recognized by neoclassical economics due to the axiomatic assumptions of the revealed preference theory (RPT) that people do what is best for them. However, present bias shows that people have different preferences over time. As they cannot be compared by the utility measurements, economists need to normatively decide between selves (short- versus long-term preferences). A problem is that neoclassical economists perceive RPT (...) as value-free and incorporate present bias within the economic framework. The axiomatic assumption that people do what is best for them leads to theoretical and practical dilemmas. This work examines weakness of will to resolve some shortcomings of RPT. The concept of intention is used to provide multiple self conception with the framework to decide between selves, which had not been done before. The paper concludes that individuals should not always follow their revealed preferences (desires) but the intentions (reason) because the latter indicates what people really want. (shrink)

New technologies not only contribute greatly to society and the economy; they also involve fundamental societal shifts, challenging our values and ideas about ourselves and the world. With a view to aligning technological change and innovation with ethical values, the concept of responsible innovation advocates the inclusion of a variety of stakeholders, in particular from society. In shifting moral responsibility towards the producers of innovations, responsible innovation rejects the standard normative economic view that the ethical evaluation of innovations is a (...) matter of individual consumers’ market-based choices. However, in this article we argue that responsible innovation should not abandon all normative consideration of the individual outright, to which end we present an alternative normative economic approach based on preference learning. We show how this approach can provide an enhanced understanding of responsible innovation by clarifying the redistribution of moral responsibility and casting individuals in the normative role of co-innovators, rather than mere consumers. We argue that responsible innovation should enable individuals to form preferences and evaluate innovations, so as to align innovation with ethical demands. Finally, we show how our proposed approach can be put into practice in so-called laboratories in real-world contexts, using methods from the field of design. In short, drawing on normative economics, this article aims to establish a new understanding of responsible innovation that is conceptually sound and can form the basis for novel innovation practices. (shrink)

The paper analyzes the methods that macroeconomists can use to provide evidence in support of causal hypotheses: the instrumental variable method and econometric causality tests. It argues that the evidence that macroeconomists provide when using these methods is in principle too inconclusive to support the hypothesis that X directly type-level causes Y, where X and Y stand for macroeconomic aggregates like the real interest rate and aggregate demand. The evidence provided by the IV method is too inconclusive because it derives (...) from conditions requiring that there be no confounders of I and X and X and Y, and because in macroeconomics, confounders that cannot be controlled for or measured are likely to be present. The evidence provided by econometric causality tests is too inconclusive because they can be shown to rely on the conditions of the IV method at least tacitly. (shrink)

Between the fourth and the recent fifth IPCC report, science as well as policy making have made great advances in dealing with uncertainties in global climate models. However, the uncertainties public decision making has to deal with go well beyond what is currently addressed by policy makers and climatologists alike. It is shown in this paper that within an anthropocentric framework, a whole hierarchy of models from various scientific disciplines is needed for political decisions as regards climate change. Via what (...) is sometimes referred to as ‘uncertainty cascade’ in the technical literature, the uncertainties of various models accumulate in the input to political decision making. This paper aims to chart the uncertainties in the multi-disciplinary enterprise of current climate modeling in broad strokes. It is shown that the uncertainty cascade makes it impossible to quantify uncertainties in the form of probability estimates. Moreover the paper highlights how global climate models fail to provide probability estimates. A better treatment of the uncertainties of climate predictions on the political level would require an overhaul of the current IPCC practice that separates the various scientific fields in various working groups. (shrink)

This paper looks at an appeal to the authority of biomedical research that has recently been used by empirical economists to motivate and justify their methods. I argue that those who make this appeal mistake the nature of biomedical research. Randomised trials, which are said to have revolutionised biomedical research, are a central methodology, but according to only one paradigm. There is another paradigm at work in biomedical research, the inferentialist paradigm, in which randomised trials play no special role. I (...) outline the inferentialist alternative in broad strokes, apply it to a recent controversy in econometrics and draw some general conclusions concerning econometric methodology. (shrink)

This paper defends the need for evidential diversity and the mix of methods that that can in train require. The focus is on causal claims, especially ‘singular’ claims about the effects of causes in a specific setting—either what will happen or what has happened. I do so by offering a template that categorises kinds of evidence that can support these claims. The catalogue is generated by considering what needs to happen for a causal process to carry through from putative cause (...) at the start to the targeted effect at the end. The usual call for mixed methods focusses on a single overall claim and argues that we increase certainty by the use of different methods with compensating strengths and weaknesses. My proposals instead focus on the evidence that supports the great many subsidiary claims that must hold if the overall one is to be true. As is typical for singular causal claims, the mix of methods that will generally be required to collect the kinds of evidence I urge will usually have little claim to the kind of rigour that is now widely demanded in evidencing causal claims, especially those for policy/treatment effectiveness. So I begin with an exploration of what seems to be intended by ‘rigour’ in such discussions, since it is seldom made clear just what makes the favoured methods especially rigorous. I then argue that the emphasis on rigour can be counterproductive. Rigour is often the enemy of evidential diversity, and evidential diversity—lots of it—can make for big improvements in the reliability of singular causal predictions and post hoc evaluations. I illustrate with the paragon of rigour for causal claims, randomised controlled trials (RCTs), rehearsing at some length what they can and cannot do to make it easier to assess the importance of rigour in warranting singular causal claims. (shrink)

This paper discusses the development of the field of economic methodology during the last few decades emphasizing the early influence of the "shelf" of Popperian philosophy and the division between neoclassical and heterodox economics. It argues that the field of methodology has recently adopted a more naturalistic approach focusing primarily on the "new pluralist" subfields of experimental economics, behavioral economics, neuroeconomics, and related subjects.

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 ‘value-free ideal’ has been called into question for several reasons. It does not include “epistemic values”—viewed as characteristic of ‘good science’—and rejects the so-called ‘contextual’, ‘non-cognitive’ or ‘non-epistemic’ values—all of them personal, moral, or political values. This paper analyzes a possible complementary argument about the dubitable validity of the value-free ideal, specifically focusing on social sciences, with a two-fold strategy. First, it will consider that values are natural facts in a broad or ‘liberal naturalist’ sense and, thus, a legitimate (...) part of those sciences. Second, the paper will not reject the value-free ideal; rather, it will construe this ideal in a special way, not casting values aside in sciences, but bringing them to the table and rationally discussing them. Today’s predominant naturalistic view has tended to ‘naturalize’ values by looking for physicalist explanations for them—a move resisted by defenders of normativism in social sciences. At the same time, a contending ‘liberal naturalist’ stream has emerged, claiming that not all natural entities can be explained by the methods and concepts of physical sciences, and favors a non-materialist naturalism which includes mind, consciousness, meaning and value as fundamental parts of nature that cannot be reduced to matter. Hence, it may be posited that non-epistemic values could be ‘naturally’ included in the field of human sciences. (shrink)

James Woodward’s manipulationist counterfactual theory of explanation offers strong tools for an adequate approach to explanation endeavours. One of these tools is the notion of intervention, which serves as a guiding principle for identifying explanations as causal, thus preserving the unidirectionality of explanatory praxis. Nevertheless, in this paper, I argue that in some cases of explanation, this notion has a rather redundant role since it is either impossible to define or it can be replaced by other types of manipulations or (...) both. I shall show these shortcomings of intervention in two particularly detailed analyses of an economic example pertaining to Okun’s law and the pendulum explanation. In analysing the former example, I contend that given the complex causal situation of economic phenomena, the notion of intervention is inept at helping explain them. In the latter example, I show that the notion of intervention is readily replaceable by other types of variation—conceptual or mathematical. Finally, I shall end this article by examining the case of pendulum explanation in light of Woodward’s new approach to explanation direction. In the end, the conclusion is that the variables of the pendulum law are in a symmetrical relationship. (shrink)

After decades of debates about species concepts, there is broad agreement that species are evolving lineages. However, species classification is still in a state of disorder: different methods of delimitation lead to competing outcomes for the same organisms, and the groups recognised as species are of widely different kinds. This paper considers whether this problem can be resolved by developing a unitary scale for evolutionary independence. Such a scale would show clearly when groups are comparable and allow taxonomists to choose (...) a conventional threshold of independence for species status. Existing measurement approaches to species delimitation are typically shot down by what I call the heterogeneity objection, according to which independently evolving groups are too heterogeneous to be captured by a single scale. I draw a parallel with the measurement of temperature to argue that this objection does not provide sufficient reasons to abandon the measurement approach, and that such an approach may even help to make the vague notion of evolutionary independence more precise. (shrink)

According to some philosophers and social scientists, mainstream economic theories currently play an unprecedented role in shaping human societies. This phenomenon can be linked to the dissemination of methodological individualism, where common goods are interpreted as reducible to aggregates of individuals' well-being. Nonetheless, some emergent difficulties of economics in coping with global institutional issues have encouraged some authors to revise that paradigm. In the last three decades, there has been a parallel growing philosophical interest in investigating social sciences' epistemological and (...) ontological foundations. Unfortunately, these two research trends have often not communicated systematically enough to understand the specific ontology of collective aims. It is still unclear whether some irreducible social goods exist and how the answer to this question can set up a consistent understanding of cooperative actions. This dissertation addresses this issue, drawing on philosophical investigations about collective intentionality. It claims that a coherent ontological taxonomy of irreducible and reducible social goods is theoretically viable and can reframe prevailing approaches to collective action dilemmas influenced by the traditional economic categorisation of goods. The research begins by analysing how the influential theory of public goods has paved the way for some social and moral impasses. Furthermore, some theoretical proposals suggesting the existence of relational goods and common-pool resources are scrutinised. Hence, a refutation of the ontological reduction of all social goods to individual ones is developed, arguing that a specific form of cooperation, grounded in we-intentions and we-reasoning, shows the plausibility of the existence of some kinds of irreducible collective goods. Expanding on that view, a refinement of this categorisation of social goods is put forward by underlying the function of some relational entities, such as trust and shared sensemaking processes, in making cooperation robust in uncertain environments. Finally, by applying the taxonomy to collective action gridlocks regarding climate change, digital information, and public education, the consistency of this hypothesis is tested, showing that a pluralistic ontological account of social goods might improve the moral understanding of current social dilemmas. (shrink)

The paper conceptualizes economic models as metaphors. It presents two different approaches to economic modeling. In the first one, economic models are treated as isolations which aim at representing the real world. In the second, they are conceptualized according to various philosophical approaches that are close to fictionalism. The aim of such modeling is to persuade and not to represent. Next, the author tries to escape the dichotomy between models as isolations and models as purely rhetorical devices by referring to (...) N. Cartwright’s understanding of economic models. The issue of their realism is also considered. The final conclusion states that models are very similar to metaphors. (shrink)

Rawls’ The Law of Peoples does not offer a clear principled account of the way in which liberal and decent peoples should deal with benevolent absolutisms. Within the Rawlsian framework, benevolent absolutisms are a type of society that respects basic human rights and is not externally aggressive. Rawls rules out the use of coercion to engage with benevolent absolutisms but does not provide an alternative strategy. The article develops one, namely, it argues that liberal and decent peoples should use positive (...) incentives to induce benevolent absolutisms to make their transition to the status of well-ordered peoples. In so doing, it offers a principled way to expand Rawls’ international nonideal theory and, in the process, provides a more nuanced approach to the promotion of political participation in international society. The article draws on the literature on economic statecraft and political theory and constructs an incentive model with seven distinct parameters attached to its definition of incentives. Finally, the article provides a real-world example, of how to concretely implement the incentive mechanism. (shrink)

Economists use various models to explain why it is that firms are capable of pricing above marginal cost. In this paper, we will examine two of them: the Cournot and Bertrand duopoly models. Economists generally accept both models as good explanations of the phenomenon, but the two models contradict each other in various important ways. The puzzle is that two inconsistent explanations are both regarded as good explanations for the same phenomenon. This becomes especially worrisome when the two models are (...) offering divergent policy recommendations. This report presents that puzzle by laying out how the two models contradict each other in a myriad of ways and then offers five possible solutions to that puzzle from various economists, philosophers of science, and philosophers of economics. (shrink)

The following introduction has two parts: the first part provides a sketch of the Frankfurt School’s history, highlighting the circumstances under which the authors discussed in this issue engaged philosophically with matters of economy. We thereby follow the prevailing periodization, starting with the school’s foundation in 1924 and ending with Theodor W. Adorno’s death in 1969 and the school’s preliminary dissolution. The second part of the introduction explores the legacy of the Frankfurt School’s philosophical critique of economy. Max Horkheimer’s writings (...) thereby serve as a model case for such a critique and become the point of departure for the discussion of contemporary critical theories of the economic. (shrink)

Research of rationality represents area of interaction between philosophy and economics. Development of neuroscience and advances in scientific research lead to another common characteristic – gradual loss of competence to comment on results of scientific research. This article describes development of the concept of economic rationality and makes an effort to deal with the following question: Can philosophy play useful role in contemporary discussions about the nature of decision-making and rationality? The authors conclude that philosophy itself does not have any (...) extraordinary method which is able to ensure an exclusive position within the contemporary research. The role of philosophy consists in analyzing arguments, explanations of terms, in the search for ethical consequences, or in the preparation of social sciences to naturalization through critical evaluation of obsolete approaches that are inconsistent with the findings of natural science. (shrink)

Uncertainty is a feeling of anxiety and a part of culture since the dawn of civilization. Civilizations have invented numerous ways to cope with uncertainty, statistics is one of those technologies. The rhetoric as the discourse of investment theory uncovers that the theory of statistics applied is a blind spot in the current conversation about investment theory and practice. Probability and prediction in investment theory look like a tying sale, since investment theory is founded on stochastical predictability. The proof of (...) unpredictability, however, lies outside the paradigm of statistics, because statistics assumes that the substrate, that produces probability outcomes, is stable. The theory of objective probabilities founds the Capital Asset Pricing Model but does not stochastically predict, and neither do Markowitz’s subjective probabilities for his portfolio theory. Statistical models for investing have a function, despite that they cannot predict: in essence, the models try to quantify statistically the equity, the fairness of the distribution of risk and return between parties involved. In the dissertation, a lot of ideas to change finance have had attention: the alternative statistical theory of Mandelbrot, bubble theory, political finance, the analysis of rhetoric, the analysis of culture, innovative practices, ethics in the form of virtue and value ethics, and the history of finance. How to make the culture of finance more heterogeneous? That starts with awareness of the current problems, the introduction of multiform metaphors for investment theory, and handling the ambiguity of theory uncertainty, by presenting, explaining and elaborating the alternatives. (shrink)