A constantly changing social reality means economic theories, even if correct today, need to be constantly revised, updated, or abandoned. To maintain an up-to-date understanding of its subject matter, economists have to continuously assess their theories even those that appear to be empirically corroborated. Economics could gain from a method that describes and is capable of generating novel explanatory hypotheses. A pessimistic view on the existence of such a method was famously articulated by Karl Popper in The Logic of Scientific (...) Discovery. He wrote ‘there is no such a thing as a logical method of having ideas or a logical reconstruction of this process.’ Herbert Simon responded to Popper and argued the opposite, namely, that there is a model of discovery and its name is abduction. Simon acknowledges his debt to Charles Peirce – the first modern logician to explicitly formulate a theory of abduction – and explains that abduction is a model of discovery that works as a problem-solving heuristic encoded.. (shrink)

As the world economy has for better or worse become more and more dependent on the financial markets, a rethinking of the role of finance in both theory and practice is necessary. I argue that such a rethinking requires a new look at the theories of finance that is philosophical in kind. In effect, as Martha Nussbaum claims, if the absence of philosophy in economics is arguably one of the main reasons for the flaws in certain economic theories, the absence (...) of philosophy in finance is one the main reasons for the flaws in our theories on financial systems. In this paper I discuss the mutual relations and benefits between finance and philosophy. First, I examine the contribution that philosophy can offer to finance by analyzing a few critical issues in financial ontology, financial methodology and financial mathematics. I argue that philosophy is essential to enabling finance to achieve the goals for which it was designed, not only because it is a valuable external addition, but also internally, since philosophy is the proper tool for bringing about new theories and approaches. Then, I examine the contribution that finance can offer to philosophy by analyzing the relationship between theory and practice, data and hypothesis, and prediction, description and control in the context of financial systems. I argue that finance can help us to rethink some philosophical tenets on these issues. (shrink)

The paper discusses the extent to which the availability of unprecedentedly rich data-sets and the need for new approaches – both epistemological and computational – is an emerging issue for Macroeconomics. By adopting an evolutionary approach, we describe the paradigm shifts experienced in the macroeconomic research field and emphasize that the types of data the macroeconomist has to deal with play an important role in the evolutionary process of the development of the discipline. After introducing the current debate over Big (...) Data in social sciences, the paper presents a detailed discussion of possible and existing interactions between Big Data and Computational Behavioral Macroeconomics. We argue that Big Data applied to economic questions can lead to new styles of thinking and research methods, namely to the development of a new research paradigm. (shrink)

The use of mathematics in economics has been widely discussed. The philosophical discussion on what mathematics is remains unsettled on why it can be applied to the study of the real world. We propose to get back to some philosophical conceptions that lead to a language-like role for the mathematical analysis of economic phenomena and present some problems of interest that can be better examined in this light. Category theory provides the appropriate tools for these analytical approach.