Ceteris Paribus Clauses and Causality in Economics

Abstract

Explicit or implicit ceteris paribus clauses are pervasive in economics. People do not always buy more of x when the price of x decreases. The generalization holds only “other things being equal” or ceteris paribus. Not everybody wants more wealth, but economists have held that the generalization holds, ceteris paribus. When government imposes price controls, shortages do not always arise, but, ceteris paribus, they do. Ceteris paribus clauses are common in other sciences, but I shall confine my remarks to economics.Many have found such ceteris paribus clauses problematic. For they are vague, and they seem to insulate theories from empirical criticism and correction. When the observed phenomena are not as the theory predicted, one can (or so it has been alleged) always claim that other things were not “equal”, that there was some “disturbance” or “interference” and thus that the ceteris paribus condition was not met.