Can social phenomena be understood by analyzing their parts? Contemporary economic theory often assumes that they can. The methodology of constructing models which trace the behavior of perfectly rational agents in idealized environments rests on the premise that such models, while restricted, help us isolate tendencies, that is, the stable separate effects of economic causes that can be used to explain and predict economic phenomena. In this paper, I question both the claim that models in economics supply claims about tendencies (...) and also the view that economics, when successful, necessarily follows this method. When economics licenses successful policy interventions, as it did in the case of the Federal Communications Commission spectrum auctions, its method is not to study tendencies but rather to study the phenomenon as a whole. Key Words: economic models • tendencies • economic experiments • policy making • John Stuart Mill. (shrink)

What sort of claims do scientific models make and how do these claims then underwrite empirical successes such as explanations and reliable policy interventions? In this paper I propose answers to these questions for the class of models used throughout the social and biological sciences, namely idealized deductive ones with a causal interpretation. I argue that the two main existing accounts misrepresent how these models are actually used, and propose a new account. *Received July 2006; revised August 2008. †To contact (...) the author, please write to: Department of Philosophy, University of Missouri, St. Louis, 599 Lucas Hall (MC 73), One University Blvd., St. Louis, MO 63121-4400; e-mail: [email protected]. (shrink)

What is the correct concept behind measures of inflation? Does money cause business activity or is it the other way around? Shall we stimulate growth by raising aggregate demand or rather by lowering taxes and thereby providing incentives to produce? Policy-relevant questions such as these are of immediate and obvious importance to the welfare of societies. The standard approach in dealing with them is to build a model, based on economic theory, answer the question for the model world and then (...) apply the results to economic phenomena outside. Data come in, if at all, only in testing a limited number of the model's consequences. Despite some critical voices, economic methodology too has by and large subscribed to a "theory first" approach to applied economics. Error in Economics systematically develops an alternative to the theory-based orthodoxy. It places the methodical study of evidence at the centre of the scientific enterprise and thus provides a foundation for a methodology of evidence-based economics. But the book does not stop at the truism that claims should be based on the best available evidence. Rather, detailed studies in the areas of measurement, causal inference and policy analysis show what it means for a claim to be evidence-based in the context of a concrete case. The examples discussed concern topics as diverse as consumer price indices, radio spectrum auctions, the transmission mechanism, natural experiments on minimum wages and the evaluation of counterfactuals for policy. Error in Economics is essential reading for economic methodologists, philosophers of science and anyone interested in how claims about socio-economic matters are validated. (shrink)

Causality in Macroeconomics examines causality while taking macroeconomics seriously. A pragmatic and realistic philosophy is joined to a macroeconomic foundation that refines Herbert Simon's well-known work on causal order to make a case for a structural approach to causality. The structural approach is used to understand modern rational expectations models, regime switching models, Granger causality, vector autoregressions, the Lucas critique, and concept exogeneity. Techniques of causal inference based on patterns of stability and instability in the face of identified regime changes (...) are developed and illustrated in two empirical case studies. (shrink)

Woodward's long awaited book is an attempt to construct a comprehensive account of causation explanation that applies to a wide variety of causal and explanatory claims in different areas of science and everyday life. The book engages some of the relevant literature from other disciplines, as Woodward weaves together examples, counterexamples, criticisms, defenses, objections, and replies into a convincing defense of the core of his theory, which is that we can analyze causation by appeal to the notion of manipulation.

Woodward's long awaited book is an attempt to construct a comprehensive account of causation explanation that applies to a wide variety of causal and explanatory claims in different areas of science and everyday life. The book engages some of the relevant literature from other disciplines, as Woodward weaves together examples, counterexamples, criticisms, defences, objections, and replies into a convincing defence of the core of his theory, which is that we can analyse causation by appeal to the notion of manipulation.