Methodological Differences between Institutional and Neoclassical Economics

Abstract

Facts, empirical evidence if one prefers, do not exist independently of theories. Instead, the preconceptions of the investigator strongly influence his search for empirical evidence. Of course, preconceptions vary among investigators, and some are often quite amorphous. Nevertheless, excepting Marxists, most economists tend to group themselves around at least two significantly different sets of preconceptions. One set is generally shared by neoclassicists, the other by institutionalists. Overlapping is quite frequent, but the fact that the American Economic Association and the Association for Evolutionary Economics are separate national organizations is evidence of this grouping. The significantly different preconceptions of and types of evidence sought by the two groups are important distinctions between them, and these differences will be analyzed here in light of recent works in epistemology and methodology.'