Karl Popper’s Theory of Science and Econometrics: The Rise and Decline of Social Engineering

Abstract

Karl Popper is, in general, best known for his Logik der Forschung, translated into English in 1959 as The Logic of Scientific Discovery [1972b], an antipositivist work that, ironically, first appeared in 1934 as one of the Vienna Circle Schriften. It is there that he first developed his falsification thesis-that component of Popper's theory of science that has held sway over economists and social scientists in the second half of the twentieth century. Although Terence Hutchison first introduced economists to Karl Popper's ideas in 1938 in his Significance and Basic Postulates of Economic Theory, Popper seems to have been far more influential in econometrics than in any other field in economics. Popper gave the new field its animus; but, unlike developments in other fields, his ideas were integrated into economic theory without reference to him or his works. Consequently, Popper's influence on econometrics has gone virtually unnoticed. A similiar fate has befallen the early econometricians' dreams (inspired by Popper's philosophy of science) of developing a tool of social engineering for the betterment of society.