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 defends revealed preference theory against a pervasive line of criticism, according to which revealed preference methodology relies on appealing to some mental states, in particular an agent’s beliefs, rendering the project incoherent or unmotivated. I argue that all that is established by these arguments is that revealed preference theorists must accept a limited mentalism in their account of the options an agent should be modelled as choosing between. This is consistent both with an essentially behavioural interpretation of preference (...) and with standard revealed preference methodology. And it does not undermine the core motivations of revealed preference theory. (shrink)

In a recent special issue dedicated to Dani Rodrik’s (2015) influential monograph Economics Rules, Grüne-Yanoff and Marchionni (2018) raise a potentially damning problem for Rodrik’s suggestion that progress in economics should be understood and measured laterally, by a continuous expansion of new models. They argue that this could lead to an “embarrassment of riches”, i.e. the rapid expansion of our model library to such an extent that we become unable to choose between the available models, and thus needs to be (...) solved to make ‘model pluralism’ viable. Drawing on Veit’s (2019a) ‘model pluralism’ account, this paper argues that model pluralism as a thesis about the relationship between science and nature undermines the very idea of a general model selection framework for policy making. (shrink)

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)

The article explores novel directions in the phenomenology of economics. It analyzes how the approaches of Till Düppe and Alfred Schütz, both inspired by Edmund Husserl, may shed light on the historical development of economics. I examine the substance and meaning of economics in the context of the forceful criticism of the whole discipline recently raised by Düppe. This examination uncovers important weaknesses and omissions inherent in Düppe’s argument against the economists’ scientific aspirations. The analysis of the social scientific endeavors (...) by Alfred Schütz who develops a phenomenologically informed ‘telescopic’ concept of an ideal type is then shown to be a more fruitful and methodologically rigorous way towards understanding the developments within economics. The Schützian view permits us to see how abstract economic models originate in the experience of the life-world and are continuous with it. Accordingly, the historical development of economic science may be viewed as consisting from two broadly defined phases, where at first the formalism is steadily increasing (the ‘zooming out’ phase) and later the discipline converges back to context-specific empirical examinations (the ‘zooming in’ phase). A case study concentrating on the economic theory of politics illustrates that both the drive towards abstraction that has culminated around 1950s and the more recent ‘zooming in’ is methodologically legitimate from the phenomenological point of view. I conclude that economics has never been completely severed from the paramount reality of the everyday life and for decades the interconnection has been growing stronger by the day. (shrink)

This open access book provides an exploration of the consequences of the ontological differences between natural and social objects (sometimes described as objects of nature and objects of thought) in the workings of causal and agency relationships. One of its important and possibly original conclusions is that causal and agency relationships do not encompass all of the dependent relationships encountered in social life. The idea that social reality is contingent has been known (and largely undisputed) at least since Wittgenstein’s “On (...) Certainty”, but social science, and most notably economics has continued to operate on the basis of causal and agency theories borrowed or adapted from the natural sciences. This volume contains essays that retain and justify the partial or qualified use of this approach and essays that totally reject any use of causal and agency theory built on determined facts (closed systems).The rejection is based on the possibly original claim that, whereas causation in the objects of the natural sciences reside in their properties, human action is a matter of intentionality. It engages with critical realist theory and re-examines the role of free will in theories of human action in general and economic theory in particular. (shrink)

Should we insist on prediction, i.e. on correctly forecasting the future? Or can we rest content with accommodation, i.e. empirical success only with respect to the past? I apply general considerations about this issue to the case of economics. In particular, I examine various ways in which mere accommodation can be sufficient, in order to see whether those ways apply to economics. Two conclusions result. First, an entanglement thesis: the need for prediction is entangled with the methodological role of orthodox (...) economic theory. Second, a conditional predictivism: if we are not committed to orthodox economic theory, then we should demand prediction rather than accommodation – against most current practice. (shrink)

Un grand nombre de problèmes dont traite aujourd'hui la théorie de la décision reposent sur des problématiques qui appartiennent à des approches philosophiques, méthodologiques et théoriques fort différentes et dont l'auteur deChoix rationnel et vie publiquedéplore à juste titre l'absence d'unité intrinsèque. En effet, les racines de la théorie contemporaine du choix rationnel ont des ramifications dans trois traditions philosophiques qui ont été maintenues sans entretenir de contacts: théories philosophiques de l'action d'Aristote à Hume, à Kant et à la philosophie (...) analytique de l'action de Davidson; la théorie du conflit de Hobbes à David Gauthier; la théorie de la justice (d'inspiration utilitariste qui a profondément marqué la pensée économique du XXesiècle). Ces branches ont entretenu des interactions sporadiques, mais ces relations n'ont jamais été exploitées systématiquement. Le travail que présente l'auteur est une première tentative dans cette direction, du moins en langue française. (shrink)

The answer in a nutshell is: Yes, five years ago, but nobody has noticed. Nobody noticed because the majority of social scientists subscribe to one of the following views: (1) the ‘anomalous’ behaviour observed in standard prisoner’s dilemma or ultimatum game experiments has refuted standard game theory a long time ago; (2) game theory is flexible enough to accommodate any observed choices by ‘refining’ players’ preferences; or (3) it is just a piece of pure mathematics (a tautology). None of these (...) views is correct. This paper defends the view that GT as commonly understood is not a tautology, that it suffers from important (albeit very recently discovered) empirical anomalies, and that it is not flexible enough to accommodate all the anomalies in its theoretical framework. It also discusses the experiments that finally refuted game theory, and concludes trying to explain why it took so long for experimental game theorists to design experiments that could adequately test the theory. (shrink)

I distinguish several doctrines that economic methodologists have found attractive, all of which have a positivist flavour. One of these is the doctrine that preference assignments in economics are just shorthand descriptions of agents' choice behaviour. Although most of these doctrines are problematic, the latter doctrine about preference assignments is a respectable one, I argue. It doesn't entail any of the problematic doctrines, and indeed it is warranted independently of them.

El trabajo identifica dos problemas metodológicos que dificultan la contrastación de teorías económicas: 1) en su empleo habitual, no es posible decidir si se satisfacen sus condiciones de aplicación, antes e independientemente de la aplicación de las mismas; 2) si es admisible modificar las condiciones de aplicación de una teoría, debe aceptarse que también pueda ser "manipulada" su clase de predicciones consideradas relevantes. Ambas tesis conforman la base de la argumentación de Milton Friedman contra el realismo de los supuestos, pero (...) no han sido debatidos explícitamente y, consecuentemente, sus argumentos no han recibido una respuesta adecuada de parte de sus críticos. Two methodological problems obstruct the tests of economic theories: 1) usually it is not possible to ascertain whether the domain assumptions are satisfied before of the applications of the theory; 2) if it is admissible to modify the domain assumptions of a theory, it must also be accepted that the class of its supposedly relevant predictions can be modified. Both thesis are the foundations of Friedman's argumentation against the realism of the economic assumptions, but they have not been debated explicitly and therefore, his arguments haven't received an adequate response. (shrink)

Este documento analiza las siguientes cuestiones: 1) La metodología de la economía y su actual institucionalización. 2) La definición de Economía. 3) Las perspectivas de los economistas acerca de la Economía, sus métodos y justificación. 4) Comprobación y progreso: Popper y Lakatos.5) Los modelos y sus supuestos. 6) Persuasión retórica y verdad. 7) La Economía como un recurso para la Filosofía de la Ciencia. 8) Expansionismo explicativo y relaciones interdisciplinares.

My philosophical intuitions are those of a scientific realist. In addition to being realist in its philosophical outlook, my philosophy of economics also aspires to be realistic in the sense of being descriptively adequate, or at least normatively non-utopian, about economics as a scientific discipline. The special challenge my philosophy of economics must meet is to provide a scientific realist account that is realistic of a discipline that deals with a complex subject matter and operates with highly unrealistic models. Unrealisticness (...) in economic models must not constitute an obstacle to realism about those models. What follows is a selective and somewhat abstract summary of my thinking about economics, outlined from two perspectives: first historical and autobiographical, then systematic and comparative. The first angle helps understand motives and trajectories of ideas against their backgrounds in intellectual history. My story turns out to have both unique and generalizable aspects. The second approach outlines some of the key concepts and arguments as well as their interrelations in my philosophy of economics, with occasional comparisons to other views. More space will be devoted to this second perspective than to the first. (shrink)

Imagine asking a typical, well informed, contemporary philosopher whether or not she considered biology to be a science. Our informant, being a philosopher, would not necessarily respond with the straightforward “of course” that would be expected from anyone else. She might first reason through a complicated and heavily qualified definition of science, or she might distinguish certain parts of biology that she held to be more clearly scientific than others. If she were partial to a certain sort of critical stance, (...) she might question the political basis for wishing to dignify certain parts of our inquisitive practice with the honorific ‘scientific’ in the first place. But there is at least one thing that she would almost certainly not do. She would not simultaneously embrace a version of the conventional philosophical view of science and deny that biology is a science. This is despite the fact that, as she will acknowledge, biology exploits a range of methodologies and explanatory strategies that have not yet admitted of systematic, consensual philosophical explication. (shrink)

Most philosophical accounts of the foundations of economics have assumed that economics is intended to be an empirical science concerned with human behaviour, though they have, of course, differed over the extent to which it has been or can be successful as such an enterprise. A prominent source of dissent against this consensus is Alexander Rosenberg. In his recent book, Rosenberg summarizes and completes his statement of a position that he has been developing for some time. He argues that although (...) economists evaluate one another's work according to shared and rigorous standards of adequacy, these standards are strictly internal, like those of mathematics, instead of being derived from discoveries about contingent relationships between theoretical statements and empirical facts. Economics, that is to say, is essentially conceptual rather than empirical inquiry. In the following discussion, I will provide grounds for resisting Rosenberg's conclusion. The point of this criticism, however, is not mainly negative. Most of the historical preoccupations of the philosophy of economics, like those of the philosophy of science in general, have been epistemological. Careful attention to Rosenberg's argument, however, redirects our attention to ontological questions about the objects of economics, and this redirection, I will maintain, is to be welcomed. I will argue that while the majority of philosophers of economics is correct, as against Rosenberg, in regarding economics as an empirical science, the conventional view as to the identity of its empirical objects should be substantially revised under the pressure of Rosenberg's criticisms. My critical analysis of the implications of Rosenberg's work for the ontological commitments of economics is intended to furnish one line of argument towards my own conception of the objects of economics. This conception, which is still preliminary in many respects, will be briefly sketched toward the end of the present paper; a detailed account of it is given in Ross and LaCasse. (shrink)

Representation theorems are often taken to provide the foundations for decision theory. First, they are taken to characterize degrees of belief and utilities. Second, they are taken to justify two fundamental rules of rationality: that we should have probabilistic degrees of belief and that we should act as expected utility maximizers. We argue that representation theorems cannot serve either of these foundational purposes, and that recent attempts to defend the foundational importance of representation theorems are unsuccessful. As a result, we (...) should reject these claims, and lay the foundations of decision theory on firmer ground. (shrink)

The relationship between economics and the philosophy of natural science has changed substantially during the last few years. What was once exclusively a one-way relationship from philosophy to economics now seems to be much closer to bilateral exchange. The purpose of this paper is to examine this new relationship. First, I document the change. Second, I examine the situation within contemporary philosophy of science in order to explain why economics might have its current appeal. Third, I consider some of the (...) issues that might jeopardize the success of this philosophical project. (shrink)

This PhD thesis focuses on the philosophical foundations of Neuroeconomics, an innovative research program which combines findings and modelling tools from economics, psychology and neuroscience to account for human choice behaviour. The proponents of Neuroeconomics often manifest the ambition to foster radical modifications in the accounts of choice behaviour developed by its parent disciplines. This enquiry provides a philosophically informed appraisal of the potential for success and the relevance of neuroeconomic research for economics. My central claim is that neuroeconomists can (...) help other economists to build more predictive and explanatory models, yet are unlikely to foster revolutionary modifications in the economic theory of choice. The contents are organized as follows. In chapters 1-2, I present neuroeconomists’ investigative tools, distinguish the most influential approaches to neuroeconomic research and reconstruct the case in favour of a neural enrichment of economic theory. In chapters 3-7, I combine insights from neuro-psychology, economic methodology and philosophy of science to develop a systematic critique of Neuroeconomics. In particular, I articulate four lines of argument to demonstrate that economists are provisionally justified in retaining a methodologically distinctive approach to the modelling of decision making. My first argument points to several evidential and epistemological concerns which complicate the interpretation of neural data and cast doubt on the inferences neuroeconomists often make in their studies. My second argument aims to show that the trade-offs between the modelling desiderata that neuroeconomists and other economists respectively value severely constrain the incorporation of neural insights into economic models. My third argument questions neuroeconomists’ attempts to develop a unified theory of choice behaviour by identifying some central issues on which they hold contrasting positions. My fourth argument differentiates various senses of the term ‘revolution’ and illustrates that neuroeconomists are unlikely to provide revolutionary contributions to economic theory in any of these senses. (shrink)

Although the theological elements of Robert Boyle’s mechanical philosophy have received careful scrutiny, his reflections on economic issues have largely been overlooked. This article takes a small step towards redressing this state of affairs. Rather than argue that Boyle – like John Locke or David Hume – was as interested in political economy as he was in discovering the nature of Nature, the article treats him as a point of entry for considering how early-modern England negotiated the revolutionary cultural and (...) economic changes that emerged as capitalism took command. More specifically, it uses one of Boyle’s less-famous inventions – a hydrostatic device for discriminating between real, degraded and counterfeit coinage – in order to explore how economic exchange began to acquire a patina of ‘objectivity’ in the 17th-century imagination. (shrink)

ABSTRACTNormative political epistemologists, such as epistemic democrats, study whether political decision makers can, in principle, be expected to know what they need to know if they are to make wise public policy. Empirical political epistemologists study the content and sources of real-world political actors' knowledge and interpretations of knowledge. In recent years, empirical political epistemologists have taken up the study of the ideas of political actors other than voters, such as bureaucrats and politicians. Normative political epistemologists could follow this lead (...) if they were to focus on the technocratic orientation of nearly all political actors in the West: that is, on their desire to solve social and economic problems. Since most technocratic policy is made by political elites, the reliability of elites' knowledge of the causes of and cures for social and economic problems is a natural topic for normative political epistemology. (shrink)

Laws of nature take center stage in philosophy of science. Laws are usually believed to stand in a tight conceptual relation to many important key concepts such as causation, explanation, confirmation, determinism, counterfactuals etc. Traditionally, philosophers of science have focused on physical laws, which were taken to be at least true, universal statements that support counterfactual claims. But, although this claim about laws might be true with respect to physics, laws in the special sciences (such as biology, psychology, economics etc.) (...) appear to have—maybe not surprisingly—different features than the laws of physics. Special science laws—for instance, the economic law “Under the condition of perfect competition, an increase of demand of a commodity leads to an increase of price, given that the quantity of the supplied commodity remains constant” and, in biology, Mendel's Laws—are usually taken to “have exceptions”, to be “non-universal” or “to be ceteris paribus laws”. How and whether the laws of physics and the laws of the special sciences differ is one of the crucial questions motivating the debate on ceteris paribus laws. Another major, controversial question concerns the determination of the precise meaning of “ceteris paribus”. Philosophers have attempted to explicate the meaning of ceteris paribus clauses in different ways. The question of meaning is connected to the problem of empirical content, i.e., the question whether ceteris paribus laws have non-trivial and empirically testable content. Since many philosophers have argued that ceteris paribus laws lack empirically testable content, this problem constitutes a major challenge to a theory of ceteris paribus laws. (shrink)

Alexander Rosenberg has played a large role in creating the philosophy of economics as a distinct area of philosophy. But since the publication of Microeconomic Laws in 1976, Professor Rosenberg's thinking about economics has been casting the subject in an increasingly uncomplimentary light. This development is reflected in Rosenberg's new book Economics–Mathematical Politics or Science of Diminishing Returns? In this stimulating work Rosenberg endorses the view that economics does not constitute scientific empirical knowledge. He says.

The most common argument against the use of rational choice models outside economics is that they make unrealistic assumptions about individual behavior. We argue that whether the falsity of assumptions matters in a given model depends on which factors are explanatorily relevant. Since the explanatory factors may vary from application to application, effective criticism of economic model building should be based on model-specific arguments showing how the result really depends on the false assumptions. However, some modeling results in imperialistic applications (...) are relatively robust with respect to unrealistic assumptions. Key Words: unrealistic assumptions • economics imperialism • rational choice • as if • robustness. (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.

Selection explanations explain some non-accidental generalizations in virtue of a selection process. Such explanations are not particulaizable - they do not transfer as explanations of the instances of such generalizations. This is unlike many explanations in the physical sciences, where the explanation of the general fact also provides an explanation of its instances (i.e. standard D-N explanations). Are selection explanations (e.g. in biology) therefore a different kind of explanation? I argue that to understand this issue, we need to see that (...) a standard D-N explanation of some non-accidental generalization (al Fs are Gs) may also ipso facto explain its contrapositive (all non-Gs are non-Fs), but the explanation is particularizable with respect to the former but not to the latter. This can be seen by noting that the Raven Paradox counterexample to the H-D model of confirmation also generates a counterexample to the D-N model of explanation (all ravens are black does not explain why the non-black shoe is a non-raven). In such cases it is natural to take the generalization with the positive predicates to have a particularizable explanation. However, this need not be the case, and in selection explanations it is the generalization with the positive predicates whose explanation is no particularizable. Thus there is no need to suppose that selection explanations are fundamentally different. (shrink)

Much of the literature on "ceteris paribus" laws is based on a misguided egalitarianism about the sciences. For example, it is commonly held that the special sciences are riddled with ceteris paribus laws; from this many commentators conclude that if the special sciences are not to be accorded a second class status, it must be ceteris paribus all the way down to fundamental physics. We argue that the (purported) laws of fundamental physics are not hedged by ceteris paribus clauses and (...) provisos. Furthermore, we show that not only is there no persuasive analysis of the truth conditions for ceteris paribus laws, there is not even an acceptable account of how they are to be saved from triviality or how they are to be melded with standard scientific methodology. Our way out of this unsatisfactory situation to reject the widespread notion that the achievements and the scientific status of the special sciences must be understood in terms of ceteris paribus laws. (shrink)

This thesis attempts to justify a normative role for methodology by sketching a pragmatic way out of the dichotomy between two major strands in economic methodology: empiricism and postmodernism. I discuss several methodological approaches and assess their aptness for theory appraisal in economics. I begin with the most common views on methodology and argue why they are each ill-suited for giving methodological prescriptions to economics. Then, I consider positions that avoid the errors of empiricism and postmodernism. I specifically examine why (...) the two major strands of methodological criticism fail to give helpful methodological advice to economists and sketch out a pragmatic approach that can do this. (shrink)

Neo-liberal economics is built upon the claim that the freedom to pursue one's self-interest and rational choice leads to economic growth and development. Against this background neo-liberal economists and policymakers endeavoured to universalise this claim, and insistently argue that appropriate economic policies produce the same results regardless of cultural values. Accordingly, developing countries are often advised to embrace the neo-liberal economic credo for them to escape from the trap of underdevelopment. However, the economic success of South East Asia on the (...) one hand and the failure of economic development in sub-Saharan Africa on the other, are increasingly proving that the 'economic' argument cannot be taken dogmatically: self-interest and rationality do not seem to be the sufficient explanations for economic development. One other avenue to be taken seriously is the link between cultural values and economic development. After viewing the principle of self-interest against its historico-cultural background, I consider this link in the African context, and argue that, although they cannot be taken as the sole factor, people's cultural beliefs and values are crucial for economic development. Economic growth and development need to be a substantiation of a people's beliefs and values. In African value system, this substantiation could lead to what one would call 'ubuntu economy' in which the state, the markets and the people are all agents, and not patients, in the process of economic growth and development. (shrink)

A standard problem in empirical inquiry is how to adjudicate between contending theories when they work from different fundamental assumptions. In the field of political sociology, several strategies are adopted, from metatheoretical and comparative historical approaches to the recent formal models of scientific growth proposed by Imre Lakatos and Larry Laudan. After considering the limitations of these approaches, I develop an alternative strategy—"second—order empiricism"—based on the idea that successor theories have an onus to explain the apparent success of their rivals, (...) not only their own and their rivals' anomalies. Such a strategy, I argue, underscores some of the most effective analysis and argument in political sociology, yet is obscured by the appeal to other methodologies. (shrink)

All economic models involve abstractions and idealisations. Economic theory itself does not tell which idealizations are truly fatal or harmful for the result and which are not. This is why much of what is seen as theoretical contribution in economics is constituted by deriving familiar results from different modelling assumptions. If a modelling result is robust with respect to particular modelling assumptions, the empirical falsity of these particular assumptions does not provide grounds for criticizing the result. In this paper we (...) demonstrate how derivational robustness analysis does carry epistemic weight and answer criticism concerning its non-empirical nature and the problematic form of the required independence of the ways of derivation. The epistemic rationale and importance of robustness analysis also challenge some common conceptions of the role of theory in economics. (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)

Corporate governance and finance are dynamic academic fields that offer myriad opportunities for business ethics analysis. Within the corporate governance triad in recent years, shareholders have increased their power over boards of directors and executives through both regulation and movements to change corporate by-laws. The impact of board characteristics on firm performance has proven elusive, leading to questions concerning board processes and individual director beliefs and behaviors. At the same time, CEOs have lost considerable power, leaving many struggling to regain (...) their control and maintain their compensation levels, while others adopt a stewardship approach to their posts. In the field of finance, the recent financial debacle has led to a reexamination of financial regulation and of the fundamental nature and purpose of the industry. All of these issues provide business ethicists fodder for investigation and analysis. (shrink)

The thesis that in social sciences causal explanations are possible only in terms o mechanisms due to the lack of genuine laws has been increasingly popular among social scientist and philosophers. In this article it is examined whether the explanation by mechanism is necessarily an explanation without laws or, on the contrary, it can involve some kind o laws. To this end it is argued, firstly, that mechanisms are not always the antonym of law insofar as they express propensities and (...) so tendencies; secondly, that these tendencies ar causal and entail capacities and dispositions; thirdly, that capacities and dispositions involve in human behaviour have to face the problem of free will; and finally, reasons are offered i favor of considering causal tendencies as authentic laws. The ultimate aim of this article is to demonstrate that explanation of social facts can involve well-established laws in its explanans although they are not universal laws. (shrink)

In this article I examine “Ontology Matters!” (OM!) arguments. OM! arguments conclude that ontology can contribute to empirical success in social science. First, I capture the common form between different OM! arguments. Second, I describe quantifier variance as discussed in metaontology. Third, I apply quantifier variance to the common form of OM! arguments. I then present two ways in which ontology is prior to social science methodology, one realist and one pragmatic. I argue that a pragmatic interpretation of ontology’s priority (...) gives proponents of realist OM! arguments a special burden that they must meet to render their argument successful. (shrink)

F. A. Hayek's realistic economic theory has been replaced by the formalistic use of equlibrium models that bear little resemblance to reality. These models are as serviceable to the right as to the left: they allow the economist either to condemn capitalism for failing to measure up to the model of perfect competition, or to praise capitalism as a utopia of perfect knowledge and rational expectations. Hayek, by contrast, used equilibrium to show that while capitalism is not perfect, it contains (...) error‐correcting institutions that bring it closer to perfection than is intuitively apparent. (shrink)

In this article, the author offers a discussion of the evidential role of the Galilean constant in the history of physics. The author argues that measurable constants help theories constrain data. Theories are engines for research, and this helps explain why the Duhem-Quine thesis does not undermine scientific practice. The author connects his argument to discussion of two famous papers in the history of economic methodology, Milton Friedman's 'Methodology of Positive Economics', which appealed to example of Galilean Law of Fall (...) in its argument; and Vernon Smith's 'Economics in the Laboratory'. While the author offers some criticism of Friedman and Smith, most of the article is a friendly reinterpretation of their insights. (shrink)

Much philosophical attention has been devoted to whether economic models explain, and more generally to how scientific models represent. Yet there is an issue more practically important to economics than either of these, which I label the efficiency question: regardless of how exactly models represent, or of whether their role is explanatory or something else, is current modeling practice an efficient way to achieve these goals – or should research efforts be redirected? In addition to showing how the efficiency question (...) has been relatively neglected, I give two examples of the kind of analysis it requires. (shrink)

The predictive inadequacy of the social sciences is well documented, and philosophers have sought to diagnose it. This paper examines Brian Epstein’s recent diagnosis. He argues that the social sciences treat the social world as entirely composed of individual people. Instead, social scientists should recognize that material, non-individualistic entities determine the social world, as well. First, I argue that Epstein’s argument both begs the question against his opponents and is not sufficiently charitable. Second, I present doubts that his proposal will (...) improve predictive success for the social sciences, which I support with Edith Penrose’s resource-based theory of the firm. (shrink)

A theoretical structure for multiattribute decision making is presented, based on a dynamical system for interactions in a neural network incorporating affective and rational variables. This enables modeling of problems that elude two prevailing economic decision theories: subjective expected utility theory and prospect theory. The network is unlike some that fit economic data by choosing optimal weights or coefficients within a predetermined mathematical framework. Rather, the framework itself is based on principles used elsewhere to model many other cognitive and behavioral (...) data, in a manner approximating how humans perform behavioral functions. Different, interconnected modules within the network encode (a) attributes of objects among which choices are made, (b) object categories, (c) and goals of the decision maker. An example is utilized to simulate the actual consumer choice between old and new versions of Coca-Cola. Potential applications are also discussed to market decisions involving negotiations between participants, such as international petroleum traders. (shrink)

While mathematical economic theory is replete with structural relationships, it has been suggested that economists have been far to content with the structure created in their conceptual theoretical worlds, and have done too little to conceptualise or study the structure inherent in actual economic systems. I advance the state of the argument by proposing a typology of theory types - correspondence, instrumental, speculative, and literary - with differing attempts and approaches to building some kind of 'correspondence' between the ontological elements (...) and relationships in the real world and the ontological elements and relationships in the theoretical world. The central argument advanced in the present paper is that the use of mathematics in economics is of a fundamentally different nature than the use of mathematics in, for example, physics. In physics an attempt is made to capture the central and important features of the real world in mathematical equations, and a deeper understanding of the dynamics and relationships in the real world is gained as a consequence. In economics, by contrast, the use of mathematics does little to identify, abstract and capture the structure existing in real world social and economic systems. The use of mathematics may make economic theories very precise, may exclude individuals without extensive training to access economic theories, and may perform a rhetorical service in presenting economic theory as mathematical and, by analogy with physics, scientific. In many cases, however, the net effect of using mathematics in economic theory is the precise opposite of the effect of using mathematics in physics: in physics, mathematics brings us a greater focus on and awareness of structures and relationships in our physical reality, while in economics mathematics takes us away from a focus on and concern with the ontologies and structures in real world economic systems and focuses our attention on abstract, invented theoretical worlds often with unclear relationships to actual economic systems. (shrink)

In his recent book, Economics – Mathematical Politics or Science of Diminishing Returns, Alexander Rosenberg has offered a forceful critique of the scientific pretensions of economics. I am encouraged to note that in his JEL review, Wade Hands singles out Rosenberg's ‘important discussion of intentionality’ as one of the most significant aspects of the book. Encouraged, because this was exactly my impression, and Hands's judgment confirmed my intention to respond to Rosenberg's argument. I hope, however, to be able to disappoint (...) Hands's expectation that this aspect of Rosenberg's work ‘will be least challenged by economists’! (shrink)

The thesis is a philosophical analysis of the consumption based capital asset pricing model, investigating in particular its epistemological and methodological foundations. Financial markets are integral parts of advanced and developing economies. They matter because they channel unspent household income into banks’ savings accounts and assets such as bonds and stocks. Financial economists have traditionally taken interest in the pricing mechanism that underlies this capital allocation. The consumption based capital asset pricing model is a prominent effort to describe, explain and (...) predict such prices. It tells a story of investors’ trade-off between consumption now and later and which portfolio of assets to hold. The CCAPM based narrative intuitively makes sense, and the chosen methodology involving theoretical assumption, mathematical models and empirical tests follows the professions’ standards of good scientific practise. But does CCAPM’s research programme provide knowledge for use? My thesis seeks to answer this question in a novel way. Instead of embarking on yet another asset pricing research project, I let Philosophy of Science inform my analysis. Following a “primer” introducing essential CCAPM topics and notations, I discuss, in turn, its theoretical foundation, mathematical model, and empirical test results from a philosophy of science perspective. I find that a few fundamental principles and several auxiliary assumptions combine to develop a simplified, partial and idealized theory of investors, financial markets and assets. The model reflects and represents this theory but also makes narrow claims that are distances away from the real situations they target. Unsurprisingly, ideal model assertions fail standard statistical tests of significance. I conclude that mathematical deductive modelling rooted in orthodox, a priori based fundamental principles create ideal and fictional settings that limit their scope and portability. The development of even more granular models within this orthodox paradigm that searches for “event regularities” will not render the desired knowledge for use. The real situations are possibly too complex to be captured in simplified assumptions, ideal theories and mathematical structures. Novel methodological and ontological approaches to asset pricing are in demand. Hence, claims about tendencies in the real data might replace the current focus on point-forecasts. (shrink)

This article assesses two major conceptual arguments against theories of choice.The first argument concerns the circularity of belief-desire psychology, on which decision theory is based. The second argument concerns the normativity arising from the concept of rationality. Each argument is evaluated against experimental practice in economics and psychology, and it is concluded that both arguments fail to establish their skeptical conclusion that there can be no science of intentional human actions.